Land cover and landscape determines runoff and sediment in watershed hydrology. The effect of land cover and landscape on runoff and sediment yield was evaluated in three small watersheds in the Enechilala watershed, found in a sub-humid Ethiopian highland. The first small watershed has an area of 83ha of which the majority (90%) is cultivated land and the remaining is a composite of shrub, bush and grazing land. The second watershed has 150 ha of which 53 % is cropland and 43% is shrub and the remaining is bush with grazing land. The third watershed has 76 ha of which 64% is cultivated land and the remaining is shrub, bush and grazing land. During the rainy phase of the 2015 and 2016 rainfall, runoff and sediment concentration were measured at the three small watersheds at (Weir 1, Weir 2 and Weir 3). According to landscape and land use bulk density & moisture content determination, grain size distribution and infiltration test were conducted in 2016. In addition rill erosion based on landscape from agricultural fields was measured in 2015 and 2016. The result indicated that infiltration rates in uplands and mid-slopes are higher and produce less surface runoff in a cultivated dominated land. To the contrary, shrub and bush at the uplands have lower infiltration rates, which increase surface runoff. The result showed that the annual runoff for W1, W2 and W3 was 29, 15 and 8 mm in 2015 and 59, 14 and 67 mm in 2016, respectively. The average cumulative soil loss by rills was of 10, 9 and 16 t ha-1 from watershed 1, 2 and 3 respectively. Up slope fields an average soil loss of 16 t ha-1 while the bottom fields were 9t ha-1. The sediment concentration for W1, W2 and W3 was 3.6, 2.4 and 12.0 g l-1 in 2015 and 5.0, 3.7 and 7.2 g l-1 in 2016, respectively. Similarly the seasonal (annual) sediment yield at W1, W2 and W3 was 1.13, 0.31 and 1.37 t ha-1 in 2015 and 3.7, 0.51 and 7.9 t ha-1 in 2016, respectively. The differences between watershed one and watershed two for daily runoff and sediment yield was statistically significant. The differences of daily sediment concentration between watershed three with watershed one & watershed two were statistically significant. The main reason for the difference is the bottom land with grazing land cover in watershed two and watershed three is relatively larger and produces relatively higher runoff. In addition, the bedrocks at the upland of these watersheds generate high runoff. Shallow and deep active gullies at the bottomlands contributed for higher sediment concentration. Rill erosion on cultivated land at early rainy season and gully erosion in saturated grazing land at the bottom were main sources of sediment in Ene-chilala watershed. The result showed that land cover and landscape have significant influence on runoff and soil loss in the highlands of Ethiopia.