Hydrological modeling is a commonly used tool to estimate the basin’s hydrological response due to precipitation. In this paper HEC-HMS model is used to simulate rainfall-runoff process of the Chemoga watershed in the Abay/Upper Blue Nile basin, Ethiopia and asses its potential for hydropower. Semi-Distributed conceptual modelling and different secondary field data were used in the modelling process. To compute runoff volume, peak runoff rate, base flow and flow routing methods, Soil Moisture Accounting(SMA) , Clark unit hydrograph, Linear reservoir and Muskingum routing methods are chosen, respectively. Rainfall runoff simulation is conducted for the events which covers six year (2004 –2009) data. For calibration of model the statistical tests of error functions like Root Mean Square Error (RMSE), Percent Bias and Nash-Sutcliffe between the observed and simulated data are conducted. The results indicate values of Root Mean Square Error (RMSE), Percent Bias and Nash-Sutcliffe is 1.0, 0.05, and 0.08 respectively. The value Nash range will be from -∞ to 1 and the optimum value is 1. Different literatures shows and scholars agreed that Nash Values ranging between 0.0 to 1.0 is considered as acceptable levels of performance. The calibrated model with optimized parameter is used for model validation. Similarly the values of Root Mean Square Error (RMSE), Percent Bias and Nash-Sutcliffe between the observed and simulated data are obtained for the validation years is 0.9, 13.62, and 0.262 respectively. The model validation was found to be satisfactory with low values of statistical error functions. So, we can use the model on the region. The Model shows that annual rainfall runoff also estimated 108,613,440 m3. If we regulate it’s per second flow with reservoir and within the existing natural head, we can generate 3,145.605 KW Hydropower per second from the regulated flow of water. Therefore responsible body of the sector should implement it by conducting detail study and design to utilize the resource.