In the Blue Nile River basin, particularly in Tana sub-basin, groundwater development for various purposes is increasing. Assessment of the groundwater potential is very crucial for sustainable use of groundwater. Therefore, the objective of this study was to assess the groundwater potential in Lake Tana basin by using GIS-based Multi Criteria Decision Analysis (MCDA) based on Saaty’s Analytical Hierarchy Process (AHP). The study was using eight important factors (thematic layers) affecting groundwater distribution derived from satellite data and observed data. These factors were lithology, lineaments/faults, drainage density, geomorphology/landform, rainfall, slope, land use/ cover and soil properties. The normalized rates for classes in a layer and weights for thematic layers were computed using AHP. The groundwater potential was determined by overlay methods based on assign rates and weight using Arc GIS spatial analysis tool. The groundwater potential of Lake Tana basin has been classified in to four classes’ viz. (low, moderate, high and very high) groundwater potential areas. The result indicated that, about 15% (1765 km2) of the total area was found as very high groundwater potential area that were found in southern, eastern and some part of northern of the Lake Tana, 26.5% (3151 km2) was classified as high 31% (3592 km2) medium, and the rest of study area 27.5% (3224 km2) were classified as low groundwater potential zones. The final groundwater potential map was validated by over laying borehole and springs yield data. These maps were good agreement (76.4%) with groundwater potential map. It was found that the groundwater potential in the basin is highly sensitive to geology and rainfall with mean variation index of 2.65% and 2.04%, respectively. Generally in this study, it is found that high groundwater potential were found at southern and eastern side of Lake Tana; and hence groundwater can be exploited more in these areas.