Nowadays, soil erosion and land degradation are common in Ethiopian highlands. However, there is a massive implementation of soil and water conservation structures in the watersheds of Ethiopian highlands. But soil erosion is still there in an aggressive rate, probably because of structures implemented without a proper understanding of the rainfall-runoff processes. This research was therefore, aimed at enabling a better understanding of hydrological process of Yewoll watershed. Point rainfall was measured and daily potential evapotranspiration was computed using simple temperature method. Soil infiltration rate was measured from thirty points using single ring infiltrometer. Shallow ground water table was measured at twenty four points at seven transects using piezometers. River flow measurements were conducted at two sub watersheds of Saligi River. Staff gauges were established and stage discharge curve was developed. A liter of runoff using bottles was taken and was filtrated using Whatman filter papers to compute the mass of suspended sediment concentration per liter. It was found that the annual rainfall was less than the annual evapotranspiration of the watershed and maximum annual rainfall was recorded in the upstream watershed as compared to the whole watershed. Maximum rainfall was recorded in August and most of the annual rainfall occurs from July to September. Maximum infiltration rate was found at the hillslopes of the upper watershed part and low infiltration rate was recorded in the valley bottoms and relatively flatter areas. Shallow ground water table level (soil saturation) was near to the ground surface for most of the rainy season in the valley bottoms of the hillslope areas and has taken long time to drain after a rain storm, while it has risen immediately and has dropped faster at high infiltration zones (hillslope areas). Both suspended sediment concentration and runoff was found to be higher at the main watershed than the upstream one, and most of it in the main rainy season. Rainfall-runoff correlation was very poor and was relatively better for the upper watershed (R2=0.135) than for the main watershed (R2=0.12). On the other hand, runoff and suspended sediment load correlation was very good (R2=0.81 for the upper and R2=0.78 for the lower or main watershed).