The Ethiopian wolf is similar in size and build to North America's coyote; it is larger than the golden, black-backed and side-striped jackal, and has relatively longer legs. Its skull is very flat, with a long facial region accounting for 58% of the skull's total length. The ears are broad, pointed and directed forward. The teeth, particularly the premolars, are small and widely spaced. The canine teeth measure 14–22 mm in length, while the carnassials are relatively small. The Ethiopian wolf has eight mammae, of which only six are functional. The front paws have five toes, including a dewclaw, while the hind paws have four. As is typical in the genus Canis, males are larger than females, having 20% greater body mass. Adults measure 841–1,012 millimeters (33.1–39.8 in) in body length, and 530–620 millimeters (21–24 in). Adult males weigh 14.2–19.3 kg (31–43 lb), while females weigh 11.2–14.15 kg (24.7–31.2 lb).
The Ethiopian wolf has short guard hairs and thick underfur, which provides protection at temperatures as low as −15°. Its overall color is ochre to rusty red, with dense whitish to pale ginger underfur. The fur of the throat, chest and underparts is white, with a distinct white band occurring around the sides of the neck. There is a sharp boundary between the red coat and white marks. The ears are thickly furred on the edges, though naked on the inside. The naked borders of the lips, the gums and palate are black. The lips, a small spot on the cheeks and an ascending crescent below the eyes are white. The thickly furred tail is white underneath, and has a black tip, though, unlike most other canids, there is no dark patch marking the supracaudal gland. It moults during the wet season (August–October), and there is no evident seasonal variation in coat color, though the contrast between the red coat and white markings increases with age and social rank. Females tend to have paler coats than males. During the breeding season, the female's coat turns yellow, becomes woolier, and the tail turns brownish, losing much of its hair.
The Ethiopian wolf is a social animal, which lives in family groups containing up to 20 individuals older than one year, though packs of six wolves are more common. Packs are formed by dispersing males and a few females which, with the exception of the breeding female, are reproductively suppressed. Each pack has a well established hierarchy, with dominance and subordination displays being common. Upon dying, a breeding female can be replaced by a resident daughter, though this increases the risk of inbreeding. Such a risk is sometimes circumvented by multiple paternity and extra-pack matings. The dispersal of wolves from their packs is largely restricted by the scarcity of unoccupied habitat.
These packs live in communal territories, which encompass 6 km2 (2.3 sq mi) of land on average. In areas with little food, the species lives in pairs, sometimes accompanied by pups, and defends larger territories averaging 13.4 km2 (5.2 sq mi). In the absence of disease, Ethiopian wolf territories are largely stable, but packs can expand whenever the opportunity arises, such as when another pack disappears. The size of each territory correlates with the abundance of rodents, the number of wolves in a pack, and the survival of pups. Ethiopian wolves rest together in the open at night, and congregate for greetings and border patrols at dawn, noon and evenings. They may shelter from rain under overhanging rocks and behind boulders. The species never sleeps in dens, and only uses them for nursing pups. When patrolling their territories, Ethiopian wolves regularly scent-mark, and interact aggressively and vocally with other packs. Such confrontations typically end with the retreat of the smaller group.
In the Bale Mountains, the Ethiopian wolf's primary prey are big-headed mole rats, though it will also feed on grass rats, black-clawed brush-furred rats and highland hares. Other secondary prey species include vlei rats, yellow-spotted brush-furred rats, and occasionally goslings and eggs. Ethiopian wolves have twice been observed to feed on rock hyraxes and mountain nyala calves. In areas where the big-headed mole rat is absent, the smaller East African mole rat is targeted. In the Simien Mountains, the Ethiopian wolf preys on Abyssinian grass rats. Undigested sedge leaves have occasionally been found in Ethiopian wolf stomachs. It is possible that sedge is ingested for roughage or for parasite control. The species may scavenge on carcasses, but is usually displaced by dogs and golden jackals. It typically poses no threat to livestock, with farmers often leaving herds in wolf inhabited areas unattended.
The Ethiopian wolf is restricted to isolated pockets of Afroalpine grasslands and heathlands inhabited by Afroalpine rodents. Its ideal habitat extends from above the tree line at about 3,200 m to 4,500 m, with some wolves inhabiting the Bale Mountains being present in montane grasslands at 3,000 m. Although specimens were collected in Gojjam and northwestern Shoa at 2,500 m in the early 20th century, there are no recent records of the species occurring below 3,000 m. In modern times, subsistence agriculture, which extends up to 3,700 m, has largely restricted the species to the highest peaks.