Ethiopia is experiencing an energy crisis, particularly in rural areas, while having a wealth of renewable resources, such as hydropower. Among integral steps in hydropower development, the preliminary task is the identification of viable potential project locations with sufficient head and flow and preliminary assessment of hydropower potential. Applying a Geographical Information System (GIS) in combination with hydrological modeling as a remedial strategy to alleviate the difficulties related to on-site measurements in remote and in-accessible hydropower locations is quick and cost-effective approach. The main objective of this study was identifying high potential run-of-river hydropower locations to quantify power potential of Birr watershed, upper Blue Nile basin, Ethiopia by using Geographical Information System coupling it with the Soil and Water Assessment Tool. Head has been identified using Geographical Information System (GIS) from digital elevation model and stream flow at identified location was simulated by using SWAT. Accuracy of model performance was verified using Birr gauging station flow and physical similarity approach of regionalization was also applied for calibrating flow at ungauged watershed. The accuracy of regionalization was further validated by using stream flow from Lah gauging station. Goodness of fit and the degree to which the calibrated model accounted for the uncertainties were assessed with NSE, R 2 , PBIAS,and RMSE of SUFI-2 algorithm. Results indicated that, calibration and validation for stream flow performed very well both for the sub -catchment and the whole catchment. Through the approach, 19 ideal locations with head varying from 10m to 37m were identified and the overall hydropower potential of the Birr watershed was estimated as 75 MW and 877 KW, respectively, when 30% and 95% reliable flow were used for hydropower production. Additionally, it has been estimated that the medium and mean annual power potential of the watershed is 23 MW and 64.9 MW respectively. The results revealed presence of enormous potential from small scale hydropower development in the study area. Furthermore, using a multi-criteria decision-making method, potential sites were ranked based on important variables that directly influence small scale hydropower development in terms of financial and technical aspects. Sites found near the outlet of study area have got higher priority rank due to existence of sites in high head and stream flow area and suitability of geological formation for hydropower development. Key words: Birr watershed, Hydrological Modeling, small-scale hydropower, SWAT, GIS