Soil Water Assessment Tool (SWAT) a physically-based distributed hydrological model, it was used to simulate the baseline and future hydrological conditions. The results indicated that the SWAT model has good performance using the observed data with an R2 of 0.88 and can give a good representation of the Birr river flow hydrographs at monthly scale (Nash Sutcliffe coefficient NS of 0.85) and using the observed data with an R2 of 0.75 and can give a good representation of the Birr river sediment yield hydrographs at monthly scale (Nash Sutcliffe coefficient NSE is 0.78) of the calibration period. Total annual sediment transport load of observed and simulated values were3776.36 and 4176.6 tons/ha, respectively (1988–1999). The average value of stream flow and sediment yield in the first ten years or baseline period is 15.36m3/s,38.49 ton/month respectively. Both sediment and rainfall showed increasing trend; and then the extent of changes were evaluated in terms of daily bases by using two decadal time periods; 1986-1995 was taken as baseline and 2001-2010 was used as baseline climate data. Due to the increment of rainfall by 14.06%, the sediment yield of the catchment has been increasing by 3.77%. So the result has been enabled us to understand that increment of sediment yield change is the most responsible factor for rain fall dynamics of Birr watershed. It also showed that the relationship between rainfall and sediment with respect to seasonal variation. According to Intergovernmental Panel on Climate Change (IPCC) future projections, precipitation and temperature will increase over eastern Africa in the coming century. The impact of climate change on sediment yield in Upper Birr catchment, Blue Nile Basin, Ethiopia, by downscaling CMIP3 global climate model using Statistical Downscaling Model (SDSM). IPCC-recommended baseline period (1986–2010) was used for baseline scenario analysis. The result of downscaled temperature reveals a systematic increase in all future time periods for both A2 andA1B scenarios. As expected, Scenario A2 is relatively warmer than Scenario A1B. For the Birr watershed, multi-model annual average temperature increasing with relative the historical (1986-2010) average for two scenarios and two periods. Precipitation projections generally show a decreasing in the Birr watershed for all climate models except CNRM_cm3 and MIROC2_3 in the A1B_2090s (2081-2100) scenarios. These increases in climate variables are expected to result in increase in mean annual sediment yield of 11.81%, 18.25%, in the 2050s and 2090s respectively for A2 scenario and 13.3%, 17.9% in the 2050s and 2090s respectively for A1B scenario for climate model MRI_cgcm2_3. These increases in climate variables are expected to result in increase in mean annual sediment yield of 15.9%, 19.9%, in the 2050s and 2090s respectively for A2 scenario. and 16.3%, 21.4% in the 2050s and 2090s respectively for A1B scenario for climate model MIROC2_3. These increases in climate variables are expected to result in increase in mean annual sediment yield of 11.38%, 14.95%, in the 2050s and 2090s respectively for A2 scenario. and 19.0%, 19.2% in the 2050s and 2090s respectively for A1B scenario for climate model GFDL_cm2_0. These increases in climate variables are expected to result in increase in mean annual sediment yield of 17.7%, 26.95%, in the 2050s and 2090s respectively for A2 scenario. and 19.3%, 24.74% in the 2050s and 2090s respectively for A1B scenario for climate model CNRM_cm2_0. These increases in climate variables are expected to result in increase in mean annual sediment yield of 10.56, 11.77%, in the 2050s and 2090s respectively for A2 scenario. and 12.7%, 15.36% in the 2050s and 2090s respectively for A1B scenario for climate model CCCMA_cgcm3_1.