Objective: Many studies report high prevalence of risky behaviors among youths of higher educational institutions of Ethiopia. And, life satisfaction is one of the aspects that lead to positive and healthy life style. However, correlation of life satisfaction and risky behaviors remained unstudied. Thus, this study intends to determine correlation between life satisfaction and risky behaviors among students of higher educational institutions. Methods: A cross sectional institution based study was conducted in Arbaminch University, Southern Ethiopia. Four hundred twenty eight students participated in the study from six colleges. Simple random sampling was used to identify respondents. Pre-tested instrument was used for data collection. Life satisfaction (using Multi-Dimensional Student Life Satisfaction Scale), sexual behaviors and substance use were assessed. Data were analyzed using SPSS version 16.0 statistical software. Explanatory Factor Analysis (EFA) was executed to identify life satisfaction domains. And, correlation analyses were performed between life satisfaction and risky behaviors. Results: 307 (71.8%) of respondents were satisfied with their life. The EFA produced five distinct life satisfaction (LS) domains which were consistent to our initial expectation. The domains produced were family, friends, self, school environment and living milieu related. With regard to satisfaction with life domains, students were more satisfied with family domain, accounting for standardized mean score of 79.6%. However, they were least satisfied with living milieu (55.0 %). Gender variation exhibited difference in LS mean score because of family domain, females were more satisfied (Ftest 1, 426, p=0.000). Students’ year of study showed no difference in LS mean score. Correlation analyses revealed that overall life satisfaction was significantly but inversely correlated with risky behaviors like having multiple sexual partners, never use of condom and alcohol use. These correlations were significantly attributed to the family and self domains, not to other domains. Conclusions: Despite high prevalence of life satisfaction, living milieu was less satisfying life domain. Life satisfied students were less likely to engage on risky behaviors. Any student centered risk behavior reduction intervention should consult life satisfaction concept, particularly because of the optimistic upshot stemming from family and positive self evaluation domains.