Fall armyworm is one of the challenges in the agricultural sector. It is a major insect pest of maize and other crops. Currently, farmers use chemical insecticides to reduce such losses. However, chemical insecticides cause the development of insecticidal resistance in insects, environmental pollution, human health hazards, harm to non-target species, etc. Therefore, agrarian look for safe and effective alternative approaches, biological control to fall armyworm. Bacillus thuringiensis (Bt) based biopesticide is a major alternative to solve these problems. This study aimed to isolate and characterize local Bt isolates from soil and water samples of different sites in Amhara and Afar Region and laboratory testing of their insecticidal activity against fall armyworm. The data was analyzed using Analysis of Variance. A total of 18 soil and water samples were collected from study sites to isolate Bt variety. Morphological and biochemical methods were used to characterize and identify Bt isolates. Based on results, a total of 21 Bt isolates were recovered from102 bacillus species- Bt like a colony and the overall Bt index corresponding to the whole sampling areas was 0.2. From total isolates, 7 isolates had a high potential to kill FAW within 72 hrs. W3C and M8E isolate were best as compared to other potential isolates, including reference strains because they were killed after 48 hrs. To conclude Screening of soil and water samples from different sources and habitats may be useful to obtain potential Bt isolates with broader host ranges and high potential for insecticidal activity.