The levels of trace metals (Cd, Co, Cu, Mn, Fe, Pb, Zn, Cr and Ni) in three commercially important fish tissues and their environment of a newly constructed manmade dam, Tendaho reservoir, investigated using validated analytical method under appropriate quality control measures. The analysis result of samples after wet digestion with flame atomic absorption spectroscopy showed that excluding Zn, Mn and Co (fishes tissue > sediment > water) metals distribution in fishes tissue and their environment existed in the order of: sediment > fishes tissue > water. In fish species regardless of the type, the levels of almost all metals were higher in detoxification organs (gill and liver) than in muscle. Higher values of calculated bioconcentration factor and two-way ANOVA analysis result (P-value < 0.05) also indicated that the highest level of majority metals existed in Catfish in compared to Tilapia and Barbus intermedius. The concentrations of Mn, Fe, Pb and Cr were higher than Ethiopian Environmental Protection Authority (2003) guidelines in water while the levels of all metals were below PEL guidelines of USEPA (2000) for sediment. Safety of customers from trace metal pollution hazard from fishes was indicated by low level of calculated hazard quotient and comparisons result with WHO (1989) and USFDA (1993) guideline values.