Small and medium enterprises (SMEs) are recognized as engines of sustainable economic growth globally. Nevertheless, SMEs are facing tremendous and restrictive external and internal challenges deterring their long-term survival and contributions. Moreover, previous studies in these regards focused on developed countries’ contexts and more on important external factors without prioritizing their impact. Therefore, this study aims to examine the internal factors and prioritize them based on their impact on the SMEs’ sustainable competitiveness from the least developed economic perspective, taking Tigray as a case. The study used the Fuzzy Delphi Method to analyze the quantitative data collected using a questionnaire instrument. Sixteen senior experts from Universities, SME owners and managers, SME regional office directors and experts, and the regional Innovation, Science and Technology bureau have participated in the study. Based on literature reviews and discussions with the experts, 11 internal factors were selected for this study. The findings of the study revealed that all the factors are accepted with an expert consensus value above 75%, the threshold value (d) ≤ 0.2, and the fuzzy score value (A) ≥ 0.5.  Dynamic capability, product quality, Entrepreneurial capability, and Innovation capability are the top four internal factors that have an impact on the sustainable competitiveness of SMEs in their respective order. This research contributes to minimizing the research gap described and has important policy, managerial, and practical implications to improve SMEs' competitiveness. This is critical for Tigray where SMEs’ contribution is highly expected in the postwar recovery and growth.