The problem of providing adequate and reliable water supply in most small developing towns of Somali region of Ethiopia are becoming a challenge for most water utilities. The main objective of this study is to evaluate the hydraulic performance of Shilabo town water supply system and recommend the possible improvement measures. In this research work, the performance evaluation of Shilabo town water supply system was conducted based on the existing water supply and demand balance, water supply coverage, water loss and hydraulic parameters (pressure, velocity and head loss gradient ) of the distribution system. The primary and secondary data sources were utilized in this research works. The primary data was collected through actual project site assessment, survey and measurements. The secondary data which includes design reports, as built design and reports were collected from the Somali region water bureau and water utility office. Moreover to analyze the hydraulic performance of the water supply distribution system the Water GEMSV8i software was used. As per the result of the analysis, for the base study year 2022, the existing per capita domestic water consumption of 22.39 l/c/d , the water supply coverage of 52.78% and the water loss of 32.01%. This shows that the existing water supply coverage is lower and the water loss was higher than the requirements and there is a deficit on the existing water supply or water production to meet the actual demand. The hydraulic analysis of the distribution system reveal that for the peak hour demand and minimum hour demand, 99% of the distribution pipe line has pressure in the range of 15 m to 70 and meet the design criteria of urban water supply by MoWE, 2006. During the peak hour demand condition, 93.28 % of the distribution pipeline has velocity in the range of 0.2 to 2 m/s and meet the requirement and 79 % of the distribution pipe line has head loss gradient less than 5m/km and meet the requirements. In general, the study revealed that the performance of the existing water supply system in terms of water supply coverage and water loss is insufficient but the hydraulic parameters of the distribution pipeline are satisfactory. The recommended remedial measures for improvement of the existing water supply system includes development of additional water sources and strengthening the operation and maintenances of the scheme.