The Ethiopian Highlands is characterized by severe land degradation that leads to high sediment loads and reservoir sedimentation. Subsequently, many reservoirs have lost significant portions of their storage capacity before half of the design service life. Therefore, reservoir capacity loss modelling and knowledge of the factors controlling sediment yield are vital to indicate the risks and mitigation mechanisms for future water resources development in the area. This study aims to develop mathematical models that relate reservoir storage capacity loss to reservoir characteristics, and sediment yield to catchment characteristics for Northern Ethiopia Highlands. The results showed that average total reservoir capacity loss (TCL) was 362,285 m3, indicating reservoir sedimentation is one of the severe problems for water resources development. The average annual reservoir capacity loss (CLY) was also 40,632 m3/yr or 2.4% per year, which exceeds the global average of 1%. Consequently, reservoirs in the area have lost up to 89% of their total storage capacity before half of the design service life, and some have completely silted-up (e.g., Adrako, Borkena and Dana) before the construction period ended. The SY derived from the reservoir surveys was also on average 56,769 Mg/yr, while the average SSY was 26.5 Mg/ha/yr. Spatially, the TCL, CLY, SY and SSY are significantly higher in the Blue Nile Basin than the Tekeze Basin. The larger observed values in Blue Nile Basin is attributed high annual rainfall, availability of deep soil and increasing removal of vegetation. Furthermore, the developed mathematical models for TCL, CLY, SY and SSY also give excellent fits (as the R2 > 99%) to the assembled data, and allow a straightforward and rapid means of estimating reservoir capacity losses due to sedimentation and sediment yield in the Northern Ethiopian highlands. This study recommends that environmental factors controlling SY, such as OM, stone cover and slope length should be well managed in order to reduce reservoir sedimentation and get the desired service sustainably. Keywords: Reservoir sedimentation, capacity loss model, sediment yield, catchment characteristics, Northern Ethiopian Highlands