Land degradation is a series problem in Ethiopia highlands, particularly in Awash River Basin reflected in the form of soil erosion and soil fertility decline from time to time. Borkena watershed is one of the major Awash River Basin tributary. The effects of watershed land use and climate on Stream flow of Borkena watershed were evaluated by distributed physically based hydrological model known as soil and water assessment tool (SWAT) model. The model was used for detail evaluation of the watershed land use and climate on stream flow and the effects of physical watershed characteristics were analyzed and character which have higher effect on stream flow were identified in the watershed. The model was calibrated for the period from 1999-2010 and validated for the period from 2011-2016. The performance of the model was evaluated on the basis of performance rating criteria, coefficient of determination, and Nash & Sutcliff efficiency on monthly based value. For Monthly simulations, in the calibration and validation period, the value shows a good agreement between predicted and measured stream flow. The overall performance of the models gives good result and the effect of watershed land use and climate on stream flow were evaluated and tested by created different scenarios. The land use land cover change scenario, the climate characteristics scenario are developed, from the land use land cover change analysis; it was found that has been a substantial decline of forest land, grass land and expansion of agricultural land. This result show that LULUC change affected the stream flow in the watershed. Three output parameters were selected to evaluate the impact of LULC; on hydrology component such as actual evaporation, surface runoff and water yield contribution to stream flow during the two LULC periods (1999-2005 and 2005-2014) and relative change in percentage. And the other scenario, the climate effect was observed by changing the climate data with 10 year interval, from 1997-2006 the climate index was 0.73 and 2006-2016 the climate index was 0.94, the simulated annual stream flow from the SWAT model was recorded 170.68 and 194.5mm/year respectively. Keywords: watershed characteristics, SWAT, River flow, Borkena watershed