Population growth causes land and water resources degradation in the Ethiopian highlands by changing the land use and land cover of the area. Land use/land cover change has been one of the factors responsible for altering the hydrologic response of watersheds. This study assesses the impact of land use and land cover change on stream flow using SWAT model in Birr watershed. ENVI 5.1 and ArcGIS are used to generate land use land cover maps and change detections from Landsat MSS TM, ETM+, and OLI/TIRS acquired, respectively, in 1972, 1986, 2001, and 2016. The land cover maps were generated using the Maximum Likelihood Algorithm of Supervised Classification. The accuracy of the classified maps was assessed using Confusion Metrics. The performance of the SWAT model was evaluated through sensitivity analysis, calibration, and validation. The result of this analysis showed that the cultivated land and built up area have expanded during the study period of 1972-2016. An increase of cultivated land by 20% over 45 year‟s period (1972 – 2016) resulted in a change of stream flow. Twelve flow parameters were used for model calibration. Runoff curve number (CN2), saturated hydraulic conductivity(SOL_K) and effective hydraulic conductivity (CH_K2) are the most sensitive parameters ranking from one up to three, respectively. Model calibration and validation for stream flow were done for 13 (1988-2000) and 6 (2001-2006) years respectively. The monthly calibration and validation results showed very good agreement between measured and simulated flow with the coefficient of determination (R2) of 0.84 and Nash-Sutcliffe efficiency (NSE) of 0.82 for the calibration, and R2 of 0.81 and NSE of 0.79 during validation period. The Daily calibration and validation results indicated a good agreement with on (R2 = 0.67) and (NSE = 0.64) for the calibration, and (R2 = 0.65) and (NSE = 0.61) during validation period. The analysis indicated that flow during the wet months has increased, while the flow during the dry months decreased. The surface runoff discharge (SURQ) increased, while ground water discharge (GWQ) decreased from 1972 to 2016 due to the increment of cultivated lands. The model results showed that the stream flow characteristics changed due to the land cover changes during the study period