The Walias Antelopes are confident they will defy expectations and proceed to the knock-out stage of the tournament even though they do not have the prestige, experience or star names of some of their rivals.
"We are going to face a lot of challenges and we have been away from the competition for a long time," striker Adane Girma told AFP.
"But we have good morale, a good mentality and we are very strong, so we can face any kind of challenge," he adds.
The Ethiopians are in Group C with Nigeria, Burkina Faso and Zambia.
The Walias beat Sudan 2-0 last October in what was an unexpected win in Ethiopia, prompting thousands of fans to pour into the streets to celebrate. They now face Zambia on January 21 in Nelspruit to kick-start their Nations Cup campaign.
Girma said the squad is focused on beating Zambia in order to move on to matches against Nigeria and Burkina Faso.
"We are just thinking about finishing that first game on top and then later think about Nigeria or Burkina Faso," he said.
Striker Saladin Said says that they are not worried by stronger teams, stating: "We are not bothered by the names; our only focus is to win."
Coach Sewnet Bishaw believes his team's strengths are in their passing and strong defence, which helped them draw a friendly against Tunisia in Qatar this month.
Bishaw believes the tournament is an opportunity for Ethiopia to prove their clout on the football pitch. "The mood is 100 per cent - they want to show their talent and sell their personality to the world," he said.
"We have tried many times to qualify for the Africa Cup of Nations, we have tried many different types of coaches, including professionals from abroad - but now we are all locals here, we made it, so it's a great thing for our nation," he added.