Land use and land cover in recent decades have changed ecosystems more rapidly and extensively than in any comparable period of time. Land used land cover (LULC) change is one of the major factors that affect watershed response. Borkena watersheds are among the most sensitive natural system and are yet the experience of a variety of challenging issues in land resource management due to the rapid growth of population, urbanization, and industrialization. The general objective of this study to assess the impact of land use and land cover change on streamflow of Borkena watershed. The impact of LULC change on streamflow of Borkena watershed was carried out using the Soil and Water Assessment Tool (SWAT). The LULC change analysis was performed by using supervised classification method ENVI 5.1 software. The study results showed that the watershed experienced significant LULC change from 1986 to 2016. During the study period, most parts of the grass land, cultivation land and shrub land were changed to build up area and bare Land. The LULC map shows an increase of buildup area and bare Land by 3.6% and 5.9% respectively over the last 31 years period (1986 – 2016). The SWAT model was calibrated for period 1996 to 2008 and validated for the period 2009 to 2015. The SWAT model was calibrated and validated for the most sensitive parameters of streamflow. Further, this model was used to assess the impact of LULC change on streamflow for the period 1996 to 2015. The result showed that there was a good agreement between observed and simulated streamflow with coefficient of determination (R2) and Nash-Sutcliff efficiency values of 0.81 and 0.79 for calibration, and 0.75 and 0.74 for validation periods respectively. The evaluation of the SWAT hydrologic response unit (HRU) due to LULC change between the years 1996 and 2016 showed that monthly streamflow was increased by 5.4 m3/s in wet months and decreased by 0.5 m3/s in dry months during period of 1996 to 2015. Understanding the effect of LULC change on stream flow is crucial for knowledge based decision making in the development of water resources projects.