Despite the fact that there are two perennial rivers in shelaha woreda, governments as well as community did not start on the implementation of irrigation project in the river catchments. As a result, people living in Sehala woreda are food insecure. Implementation of irrigation project need huge investment. Before start of construction of irrigation estimating the amount of irrigable areas and estimation of water potetial of the area is mandatory. Therefore, this study was initiated with the objective of assessing the water and land resources potentialof river catchments in Sehala Woreda of Waghmra Zone for irrigationdevelopment.Factors used for estimating the irrigation potential area includes soil type, slope, land cover/use, and distance from water supply(sources). GIS based multi criteria evaluation was applied for irrigation suitability analysis and HBV and CROPWAT-8model were used for estimation the potential of water resources. From muliti criteria evaluation a total of 16074 ha of lands are suitable for irrigation. Banana and Mangocrops were used for calculation on of water demand for CROPWAT-8 model. The HBV model was calibrated and validated from observed daily stream flow of the watershed. The calibration and validation result showed that model performance evaluation statistics coefficient of determination (R2), Nash-Sutcliffe model efficiency (NSE) and Percent Bias(PBIAS) were in the acceptable range(R2> 0.6, NSE value between 0.6 and 0.8 and (PBIAS value between 10 and 15%).This shows that a good agreement between the simulated and observed values. Water potential of the basin can satisfy the existed irrigation potential of the areas..