The ONLF said troops had rounded up the villagers, before gunning them down.
It said more than 50 other people were wounded in the attack in the village of Moohaya in the south-east. Ethiopia’s government has not reacted so far.
The Ethiopian military was accused of carrying out atrocities in the region by a rights group this year.
Human Rights Watch said in June the military had subjected civilians to executions, torture and rape in an attempt to put down the ONLF’s rebellion.
The government denied that allegation and has dismissed similar accounts as “rebel propaganda”.
The ONLF, founded in 1984, says it is fighting for the rights of the local Somali-speaking population.