Aluto volcano, situated in the central Main Ethiopian Rift (MER) within the northern part of the East African Rift System (EARS) is seismically active, with indications of unrest detected by InSAR. It hosts Ethiopia’s first pilot project for geothermal energy. Despite extensive studies, uncertainties remain about the mechanisms of unrest and the existence of a shallow magma chamber beneath Aluto which could drive the hydrothermal system, and is crucial for understanding its geothermal potential. This study investigates Aluto’s magmatic and hydrothermal systems using observations of seismicity in the region. We analyse seismic data from January 2012 to January 2014, locating 2393 events, which lie predominantly along the Wonji Fault Belt (WFB). Event depths reach up to 40 km beneath Aluto, suggesting the presence of fluids and perhaps a highly crystallised mush, consistent with prior magnetotelluric and gravity studies. Deep crustal seismicity likely relates to fluid and/or magmatic processes. High-b value of 1.97 ± 0.10 at Aluto indicates the presence of fluids. Seismicity is negligible beneath Silti Debre Zeyt Fault Zone (SDFZ), previously identified as a highly conductive, indicative of melt. Focal mechanisms show normal faulting in the direction of rift extension and full-moment tensor inversions suggest shear-failure with fluids potentially activating existing faults. We suggest that the magmatic and hydrothermal systems are connected through pre-existing faults. Understanding this interaction will enhance our knowledge of the geothermal system, volcanic risk, mechanisms of unrest, and emplacement of geothermal brines.