objective of this study was to make an impact assessment that Gibe III hydroelectric dam may bring on the movement, distribution and quantity of surface water. The hydrologic impact assessment of the project during its operation, however, was carried out based on scenarios that are developed taking the maximum power output capacity of the project, i.e. 1,870 MW, into consideration. Reservoir rules of two US hydropower projects, namely Trinity and Shasta, were referred while developing the scenarios. This is because the reservoir operation rule of the Gibe III hydroelectric project is not available in a way needed for the purpose of this study. SWAT model was used to model the watershed, simulate the flow and approximate the evaporation from the reservoir. Flow simulation was done twice: without reservoir case and with reservoir case. Meteorological data such as daily rainfall, daily maximum and daily minimum temperature and relative humidity; and spatial data such as DEM, soil and land use map of the study area were used as an input of the model. The meteorological stations considered were Baco, Bonga, Hossana, Jimma, W/Sodo, Limugenet, Wolliso, Wolkite and Sekoru. In addition to metrological and spatial data sets, observed flow data of the Great Gibe Near Abelti station were used for model calibration and validation purposes. According to the result of the study the average monthly flow at the dam site is 1,162m3/sec with the minimum average monthly flow being observed in January, 324m3/sec, and maximum in August, 2,227m3/sec. The result also showed the yearly average flow portrayed decreasing trend since 1999 and never went above the flow value of 1,200m3/sec. During a reservoir fill period, a total volume of 2,300 Mm3 water was blocked from joining the downstream flow to fill the reservoir to its minimum operation level; while a total of 12,300 Mm3 volume of water was retained to fill the reservoir to its live capacity. On average 919,283 m3 of water was estimated to be lost through evaporation during reservoir fill to its minimum operation level whereas the evaporative loss was computed to be 7,272,721 m3 during the reservoir fill to its live capacity. Under both scenario wet season flow without reservoir was observed to be much higher than the wet season flow with reservoir; whereas dry season flow without reservoir found significantly decreased compared to dry season flow with reservoir. Keywords: - SWAT, Gibe III, Great Gibe Near Abelti station, Scenarios, Meteorlogical Data, Spatial Data