An early goal gave them a lead after just four minutes, before a second late on clinched the victory.
The result leaves them at the top of Group C.
Read how all the action unfolded below:
5.32pmGood evening! The second of today's Group C fixtures gets underway in around half an hour, with Libya taking on Ethiopia.
5.34pmLibya had originally been due to be playing at home at this tournament, but due to 2012's political uprisings in the country, it was decided to move the tournament to South Africa instead.
5.37pmBefore the start of the tournament, Ethiopia coach Sewnet Bishaw told reporters: "The team l have brought here is ready to fight hard, and hey, this is football you never know the outcome. You do your best and see how things go and this is a different team from last time we were here but we will definitely be competitive, that l can guarantee to you."
5.40pmHeading into the tournament, Libya have been in improving form, losing just twice in their last five matches. However, they're missing a couple of their regular players due to them playing their club football outside of their home country.
5.43pmEthiopia have been in similar form recently, with one defeat in their last four, but are missing a greater proportion of players because of their ineligibility for this tournament. The team news is just in for this game, so let's take a look at the lineups.
5.45pmLIBYA STARTING XI: El Mutasem Abushnaf, Ahmed Al Alwany, Abd Selam Al Fitouri, Mohamed Ali Al Gabsi, Mohamed Al Ghanodi, Moaied Abdeslam Al Gritly, Ahmed Mohamed Al Maghasi, Muataz Fadel Al Mahdi, Ali Mohamed Al Musrati, Mohamed El Hnaish El Gadi, Ali Taher El Hadi
5.47pmETHIOPIA STARTING XI: Butako Bune Abebaw, Dereje Genet Alemu, Tariku Getnet Alemu, Fasika Gebregiorgis Asfaw, Ephrem Melore Ashamo, Behailu Assefa, Hailu Reda Aynalem, Saladin Bargecho, Berhanu Bogale, Degu Debede, Biyadiglign Elyaszewg
5.50pmLibya's relations manager told the tournament's official website: We have set ourselves a semi-final place as a target and should we achieve that, it will have been a successful tournament. Ghana is a perennial football giant and Ethiopia like us are a team built mainly on local players with a few playing abroad and Congo too are a formidable side so this is not a push over group but we have belief and we will compete well."
5.54pmThe players are starting to make their way out of the tunnel. As with every match for this tournament, we;ll have the national anthems from both sides before the match gets underway.
5.57pmEthiopia appear to have brought a big crowd with them. The Free State Stadium was virtually empty for the earlier game, but there's a sea of yellow and green in the bottom tier now.
5.59pmRight then, all the pre-match formalities are out of the way, the captain's shake hands and get their teams into position ready for kickoff.
1 minLibya get the first half underway.
3 minLibya quickly win a free kick out wide after Fetori was tripped while racing towards the Ethiopia goal. The midfielder gets a chance inside the box, but can't keep his effort on target.
4 minGOAL! Libya 1-0 Ethiopia (Abushnaf)
4 minWhat a start by Libya! El Mutasem Abushnaf uses all of his pace and some impressive footwork to find his way into the box. Initially it looks like he's left himself too tight an angle to make the shot, but somehow he forces it over the line to give Libya an early lead.
8 minLibya are on the attack again and have a free kick from around 25 yards out. El Gadi smashes it towards goal, but Bushra is able to get a hand to it in the Ethiopia goal to keep the ball out. Libya look just unstoppable at the moment.
10 minEthiopia finally make their way into the Libye half, with Abebaw dashing down the wing before winning a throw in. He launches it long into the penalty area, but it's claimed by the keeper.
12 minA back pass goes wrong for Ethiopia, almost resulting in an own goal, but it goes wide for a corner. El Houni tries to head it in from the corner, but it goes just wide.
14 minCHANCE! Abushnaf almost adds his second, unleashing a powerful effort from 20 yards out, but it rises just a fraction too high. Ethiopia have just no mementum whatsoever at the moment, they're lucky to only be a goal behind.
15 minEthiopia manage to get into a strong attacking postition, but the referee spots a foul on Al Alwany in the box, and gives Libya the free kick.
16 minDespite Libya's obvious attacking edge, Ethiopia have actually seen more of the ball so far, with 55% of the possession, they're just struggling to do anything with it at the moment.
18 minCHANCE! Muhammad Nashnoush has to make his first save of the game for Libya as Alemu shows his athleticism to control the ball in midfield, before unleashing a rocket from almost 30 yards out. That's the first decent shot Ethiopia have had.
20 minCHANCE! Libya quickly go on the counter attack, and win a corner, but Al Gritly's attempt to tap it in is saved.
20 minBOOKING! Mahomed AL Ghanodi picks up the game's first booking for what appeared to be an off the ball incident.
24 minEthiopia are starting to look a bit more organised, and are spending less time in their own half, but Libya still seem to be in control, but Al Ghanodi gives away a free keep to give the ball back to Ethiopia.
27 minEthiopia make a series of quick passes in midfield which gets the crowd going, but Libya manage to force them backwards. They eventually find their way to the edge of the Libya penalty area, but the danger is swiftly cleared.
28 minCHANCE! Assefa lofts the ball in high for Alemu, but he isn't completely in control when he takes his shot, sending the ball well clear of the crossbar.
31 minLibya will be worries to see goalscorer Abushnaf in pain on the ground after a nasty looking challenge from Degu. The physio manages to get him into his feet to get him to the side of the pitch for a better look. He seems to be moving alright under his own weight so should be ok to carry on
34 minEthiopia are beginning to dominate possession, but still struggling to get forward. Minyahile has the ball 25 yards out, but has no-one ahead of him so decides to take it on himself from long range, but his finish is well high.
36 minEthiopia win a throw in near the corner, and get the ball into the box with stunning fast passes, but Libya manage to block Abebaw's attempted cross.
38 minAbushnaf is tripped right on the edge of the penalty area by Reda, having already shaken of a challenge from Degu, giving Libya a chance from a dangerous position.
40 minBOOKING! The free kick is delayed as Ethiopia won't let the Libyan players stand in the wall. After much pushing an shoving, the referee has to intervene, booking Faisal Saleh
41 minCHANCE! Abushnaf drills his free kick through the wall, but Bushra is able to make the save, initially parrying the ball before burying it beneath him.
44 minBOOKING! It's turning into quite a scrappy affair late in this first half, as Asrat Gobena in the third player to be, having shoved Abdelrahram Fetori behind the goalline while trying to shoot for Ethiopia.
45+1 minLibya are trying to finish strongly, obviously wanting to avoid being behind at the break, but Libya's defenders are well organised at the back. Ethiopia have three minutes of stoppage time if they want to find the equaliser before half time.
45+3 minLibya show their speed again on a dangerous-looking counter attack, but Ethiopia get numbers back at the last minute. Ethiopia then go on their own counter, leaving Libya short of the back, but Nashnoush is able to stop efforts from Oukri and Fedaku.
45+3 minHALF TIME: Libya 1-0 Ethiopia
6.53pmSo at the break, Libya have a 1-0 lead thanks to an early strike from El Mutasem Abushnaf. The Libyan players had several chances to increase their lead, but Muhammad Nashnoush has also had to be alert in goal to stop a late equaliser from Ethiopia.
6.56pmDiscipline became a bit of a problem towards the end of the half, with challenges flying in all over the place! The referee has had to dish out three yellow cards so far, but if the tackling stays like that after the break I wouldn't be surprised to see a red.
6.59pmThe bookings may force some early substitutions once play resumes, although Ethiopia may be looking to make some changes anyway as they continue to try and get back on level terms.
7.03pmThe players are making their way back out ready for the second half.
7.04pmIt looks like Ethiopia will be making a change before the second half gets underway.
7.05pmSUB! Abera Manaye Fantu comes off the bench for the visitors, replacing Dawit Fekadu.
46 minEthiopia get the second half underway.
48 minIt looks like Ethiopia may have to make their second change as Tesfaye Seyoum appears to have picked up an ankle knock, and is quickly stretchered to the sideline.
51 minEthiopia seem content just to keep possession at the moment and wait for an opportunity to present itself, but Libya decide not to give them that chance, as El Gadi makes a solid tackle in the centre circle to win the ball back for Libya.
52 minFantu shows why he was brought off the bench at half time, skipping around the Libya defence before his cross is blocked. It looks like the winger could prove a bit of a handful.
53 minCHANCE! Megersa fails to spot that he has teammates ahead of him closing in on the Libya penalty area and takes a shot himself from long range, but it was always going high.
55 minCHANCE! Some fantastic commitment from Sabbou gets the ball into the box for El Gadi, but the Libya midfielder's effort is a fraction wide.
57 minSUB! Moaied Abdeslam Al Gritly comes on to make his Libya debut, replacing Ali Mohamed Al Musrati.
59 minCHANCE! That has to have been Ethiopia's best opportunity of the match. Fantu does all the hard work, breaking from midfield, rounding several defenders to leave himself with just the keeper to beat. He had a couple of teammates alongside him, but thought that he could dink it over the keeper himself, but he gave it too much, sending the ball well high.
62 minIf the game finishes as it is, Libya will be tied at the top of group C with Ghana, who beat Congo 1-0 earlier.
64 minThere's been very little in the way of attacking moves by either team since Fantu's chance a few minutes ago. Libya seem to have given up looking for their second, while Ethiopia can't find a way through for the equalier.
66 minJust as I say that, Libya suddently break from midfield and win a corner, but Al Gritly's delivery is far too powerful, easily clearing the penalty area before going out the other side.
69 minSUB! Libya make their second change of the game, bringing on Anis Mohamed Saltou for Faisal Saleh
72 minThe substitute comes close to adding a second for Libya, as he unleashes a powerful strike from the edge of the box, but it's comfortably held by Bushra.
76 minChances are really few and far between at the moment. Ethiopia try to play the ball forward, but Fantu drifts offside. It's the third time that Ethiopia have been flagged for offside this evening.
79 minEthiopia win a corner, but it comes to nothing. They quickly get the ball back in midfield, but Libya are still making it difficult for them to move the ball towards the penalty area. It definitely looks like Libya think one goal will be enough, as there's been very little attacking intent from them in the last 15 minutes.
81 minAhmed Al Maghasi goes on a decent run towards the Ethiopia goal, trying to find a second for Libya, but a poor touch while lining up the shot allows Ethiopia to clear the danger.
84 minGOAL! Libya 2-0 Ethiopia (Al Fitouri)
84 minAbd Selam Al Fitouri has seemingly won it for Libya, slotting in their second of the game. A horrendous mix up by the defence sees Hailu play the ball in front of goal, allowing the substitute to slot it in past Bushra.
88 minLibya really have switched to defensive mode now, with practically the whole team behind the ball. They don't need to worry though, as Ethiopia's heads have dropped since the second goal.
90+1 minCHANCE! Nashnoush makes another save, palming away a free kick effort from Minyahile. There will be five minutes of stoppage time.
90+4 minLibya pass the ball among the back four as they wait for the added time to run down. This result will put them above Ghana in the highly-competitive Group C.
90+5 minFULL TIME: Libya 2-0 Ethiopia
7.56pmSo Libya win their opening game of the African Nations Championship with a goal early in the first half, and another inside the last 10 minutes.
7.59pmAs I mentioned a moment ago, that puts Libya in pole position in Group C, with a game against former finalists Ghana to come on Friday. That's all from this match, but join us again tomorrow when the Group D teams are in action, as the Democratic Republic of Congo take on Mauritania, before Gabon face Burundi. Until then, thanks for joining me this evening, goodbye.