Empirical evidence on households' fuel choices for lighting is lacking in literature in developing countries. We use the World Bank's socioeconomic survey data to study households' lighting choices in Ethiopia. Using a panel multinomial logit model, we investigate the determinants of households' lighting choices and the transition to cleaner fuel sources. In addition, we use a recent cross-sectional survey to complement the results of the panel data. We find that the energy ladder characterizes the households' fuel choices for lighting. As income increases, the probability of households choosing cleaner fuel sources also increases. We also found that education, fuel prices, and location significantly affect fuel choices for lighting. In addition, there is a significant percentage of fuel transition probabilities across different households. Households' education levels and higher incomes facilitate a transition to modern fuel sources. Investments in education increase households' productivity and incomes which will enable their faster and more general transition to cleaner fuels.