Background: RT-qPCR is the gold standard for diagnosing COVID-19, the testing process requires RNA extraction, which can be time-consuming, costly and infectious. This study aimed to compare the diagnostic performance of an extraction-free heating and dilution method (EFHD) with conventional extraction-based (EB) methods for detecting SARS-CoV-2. Method: A total of 300 specimens, (190 positive, 110 negative) were collected retrospectively from the National Virology Reference Laboratory repository of Ethiopian Public Health Institute (EPHI). The specimens were diluted in 1:2 with RNase-free water and heated at 72°C for 15 minutes. 10µL of the heated sample/ elutes were mixed with 20µL of the master mix and runned using an ABI 7500 Fast instrument (ThermoFisher Scientific). Performance characteristics were analyzed using R-Studio and STATA v17. Result: The EFHD revealed a sensitivity of 92% and a specificity of 100%. The accuracy of the new method was 85.8% (163/190). The new method reported 15 false negatives and 12 invalid results. The EFHD method exhibited strong agreement with the standard method, (with an agreement of 95%, and a kappa coefficient of 0.89). It performed well with high viral load samples (Ct < 20), but exhibited reduced sensitivity for lower viral loads (Ct > 35). The study confirmed a significant correlation (R² = 0.99, p = 0.001) between EFHD and extraction-based SARS CoV-2 detection methods. Conclusion: EFHD demonstrated good performance characteristics. Its tendency to produce false negatives in low viral load cases suggests room for improvement. This method could be the choice of testing in resource-limited areas specially for outbreak management and control.