A study was conducted to determine the downstream impact of Bahir Dar Tannery wastewater on the head of Blue Nile River using Macro-invertebrates as bio-indicators. Four sampling sites (one up-stream and three downstream) were selected along the river and samples were collected from Octoberto March, 2010/11. Macro-invertebrates were collected together with physicochemical data using standard dip net based on the Rapid Bio-assessment Protocols for use in streams and wadeable rivers. The result showed that the impact of the effluent from BOD, COD, NH3-N, total nitrogen, chlorides, sulphides and chromium was significant with concentrations of 342±52.5, 850.75±96.2, 288±75.8, 462.5±130, 1408.13±405.3, 16.05±3.04 and 3.54±0.55, respectively. Analysis of variance indicated that all the physicochemical parameters except temperature, pH and total phosphorous significantly varied among sampling sites (p<0.05); the reference or upstream site having lower value than downstream sites. Macroinvertebrates collected were identified to the family level. A total of 9,162 individuals belonging to 28 families were collected during the study period. Results of ANOVA showed that, there was significant difference in macro-invertebrate metrics among sampling sites. Percent EPT, Shannon Diversity Index and Benthic Macro-invertebrate Index were higher and percent Diptera, Chironomidae and Hilsenhoff Family level Biotic Index were lower at the reference or upstream site. Pearson's correlation coefficients showed that, most of the physicochemical parameters were significantly correlated with macro-invertebrate ... . metrics-except for pH, temperature and phosphorous. The categorization of sites based on ~ ,,.: Benthic Macro-invertebrate index value indicated that the site just below the effluent \ ABSTRACT discharge and 200 m from it were severely to slightly impacted, the last downstream site moderately to less impacted and the reference or upstream site very little to none impacted. The water quality at these sites was also very poor to poor, fair to good and very good to excellent, respectively. The most impacted sites ranked last in all sensitive metrics while the ""' reference ranked first in sensitive metrics indicating the severe impact of the effluent on downstream sites. The result gave the trends of pollution of the river by the effluent and the urgent need for measures to be taken so that the tannery will satisfy the provisional standard limit and then become an environmental friendly.