The threat of aflatoxin contamination in food commodities and its association with health risks in both animals and humans continues to raise increasing concern over years. In this research, A. flavus species found in association with peanuts in storage and their potential to produce aflatoxin in collected samples was determined. About 11 to 87% of collected peanut samples were infected with various moulds including Rhizopus sp., Fusarium sp., Aspergilus flavus, A. niger, other Aspergillus sp., Penicillium sp., and other undefined sp. Aspergillus flavus is known to be the most patent aflatoxigenic strains infects 80.69 % of the total samples analyzed. Eighty five percent of the tested isolates of A. flavus were capable for the production of aflatoxins. From the total of 52 peanut (Arachis hypogaea) samples analyzed, 38 (73.06 %) were positive for aflatoxin. The average levels of aflatoxins detected in the seed samples were between 0.57(from Babile new harvest sample) to 447.02 ppb (from Babile three month stored in pp bag). The higher level of toxicity is more than twenty times greater than the acceptable dosage (20 ppb: US Standards) in peanuts of three month stored after wet shelling. This research pointed out that the storage and shelling practice of farmers have effects in aflatoxin contamination in peanut despite enormous efforts to control this mycotoxin.