Flood hazard and water erosion are key environmental problems in degraded watersheds. This study was conducted in Iresha watershed in Guraghe zone where there is high incidences of floods and upland degradation. The objectives of this study are to examine LULC change and dynamics in the last three decades, to assess the retrospective and prospective state of soil erosion in the watershed, to analyze flood discharge and future flood risk potentials, to examine local land management practices and to suggest appropriate management interventions for the watershed. LULC change and dynamics analysis was conducted with RS and GIS. Soil loss was analyzed using RUSLE model with GIS and RS and also GIS and RS based analysis of runoff was determined with cook’s method and management practices of the watershed is assessed using interviews of local farmers, NGOs and government workers. The results show that Iresha watershed is experiencing high LULC change and dynamics on cultivated lands, Enset, Erica bush land and natural vegetation with Eucalyptus and Cupressus. By now the watershed is dominantly covered by cultivated land (26%) followed by natural vegetation with dense grass (23%). In the watershed the most changed land cover is Erica bush land with sparse trees and it is changing 26 ha yr-1. The soil loss from the watershed is increasing over years and cultivated lands generate more soil (17.35 tha-1yr-1) that was beyond the tolerable limit for the area with the same agro-ecological setup and also for Africa and for global average. Sub-watersheds on the upper part of the study watershed (32.4%) are generating more soil with high future potentials. Runoff discharge was increasing annually and sub-watersheds in the upper slopes generates more runoff while subwatersheds in the lower slopes are generating less runoff which was calibrated by recorded discharge values at the out let of the river by MoWR that ranges from 95m3s-1 to 305m3s-1. Maximum soil and runoff is generated from cultivated lands and the maximum runoff and soil generating capacity is shifting upwards and more soil and runoff is generated from the upper slopes due to the encroachment of cultivated lands to the natural forests and Erica bush lands, free grazing in the natural forests and Erica bush lands and lack of proper focus on natural resources management. Finally the cause for flood hazard in Iresha watershed is identified and to protect those causes of flood the possible corrective measures are planned. Key words:- Runoff discharge, Flood risk assessment & mapping, soil loss, soil erosion risk mapping, LULC Change detection, LULC dynamics analysis, GIS & RS, flood plain, flood hazard zone, RUSLE, Cook’s method, Catchment Characteristics, etc