Agriculture is a major source of income in Ethiopia, with irrigation playing a vital role. Currently, smallholder farmers face challenges related to inefficient water and resource usage in agriculture, leading to crop failure, reduced productivity, and negative impacts on their livelihoods. This study presents the design and analysis of a sensor‐based automated irrigation system tailored for modern agriculture in Ethiopia’s Sidama Region, integrating real‐time soil moisture monitoring, weather data analysis, and solar‐powered automation to address water scarcity and inefficient irrigation practices. The methodology included crop water requirement (CWR) analysis using CROPWAT 8.0, pumping system design, and photovoltaic (PV) sizing for energy efficiency. Proteus simulations confirmed autonomous irrigation adjustments that reduced water waste by 35% while maintaining optimal soil moisture. Results showed significant improvements in water‐use efficiency, with the solar pump delivering 22.2 L/min at an 18 m head using a 360 W PV array. The study highlights precision agriculture’s potential to enhance smallholder resilience in water‐stressed regions, offering a solution to boost productivity and mitigate climate risks, while demonstrating the viability of automated irrigation in improving water management and food security in developing areas.