The objective of the study was to estimate the prevalence and losses associated with subclinical mastitis (SCM) caused by Staphylococcus aureus in Ethiopian crossbred dairy cows. A split-udder trial was carried out to determine milk yield losses in udder quarter with S. aureus-caused SCM. Each quarter of the study cows was examined using the California Mastitis Test (CMT) and quarter milk production was measured over a period of 8 days. Milk yield losses for CMT positive quarters were estimated by comparing production of quarters with CMT score 0. Mean milk yield for uninfected healthy quarters was 1.66 kg per milking (95% CI, 1.66-1.55 kg per milking), and the rate of milk reduction for quarters with CMT scores of 1+, 2+, and 3+ was 25%, 33%, and 48%, respectively. Economic losses at different farm-size levels were calculated by multiplying the prevalence of CMT scores with milk yield losses associated with respective CMT scores. In Debre Ziet dairy herds, a quarter with SCM due to S. aureus lost an average of 34.5% of its potential milk production while the total milk yield loss per cow was estimated at 6.8%. Losses were highest in large-scale (13%) farms and lowest (3.7%) in small-scale. Based on the prevalence, the overall financial loss for each cow per lactation was 984.64 Eth Birr (US$78.65) and losses in large farms (1,882.40 Eth Birr or US$150.35) were over 3.5 times the loss in small-size farms. These figures possibly underestimate the potential benefits of mastitis control program as they do not include other direct and indirect costs.