The objective of this study was to investigate the impact of common mental disorder (CMD; depression/anxiety) symptoms and risky substance use in people with epilepsy in Ethiopia (four districts) on quality of life (QoL) and functioning over 6 months. A prospective cohort study was carried out. Multivariable linear regression followed by structural equation modelling (SEM) was employed. In the multivariable regression model, neither CMD symptoms (β coef. = −0.37, 95% confidence interval [CI] −1.30, +0.55) nor moderate to high risk of alcohol use (β coef. = −0.70, 95% CI −9.20, +7.81) were significantly associated with a change in QoL. In SEM, the summative effect of CMD on QoL was significant (B = −0.27, 95% CI −0.48, −0.056). Change in functional disability was not significantly associated with common mental disorder (CMD) symptoms (β coef. = −0.03, 95% CI −0.48, +0.54) or with moderate to high risk of alcohol use (β coef. = −1.31, 95% CI −5.89, 3.26). In the SEM model, functional disability was predicted by both CMD symptoms (B = 0.24, 95% CI 0.06, 0.41) and seizure frequency (B = 0.67, 95% CI 0.46, 0.87). In this rural Ethiopian setting, co-morbid CMD symptoms and seizure frequency independently predicted functional disability in people with epilepsy.