The study area is found in northern Ethiopia at the northern portion of the Raya valley, whichrnforms its own trough at the western shoulder of the Afar Depression. Its total aerial coveragernis about 1302 krn2rn. It is largely covered by the Mehoni Sub-basin, which is surrounded byrnvolcanic hills with sediment filled depression at the center. The Lake Ashange basin is alsornlocated on the south-western highlands of the study area. T~e main objective of this work wasrnto study the overall hydrogeological and hydrochemical setup of the study area.rnThe overall water balance of the study area was computed with an aim of estimating thernamount of annual recharge to the groundwater. Accordingly, the mean annual rainfall as thernonly water input into the study area was estimated to be 722.42 mm1year. On the out put side;rnthe actual annual evapotranspiration was estimated to be 687.24mm1year, the annual surfacernwater out flow was estimated to be 52.3 MCM, the annual lake surface evaporation wasrnestimated to be 16.73 MCM and the annual bareland evaporation was assumed to be half thernlake surface evaporation. Finally, a annual recharge to the groundwater of the study area isrnapproximated to be 60.9 MCM.rnThe study area comprises two major hydrolithologic units. They are the alluvial aquifers 'andrnthe basaltic aquifers where the alluvial aquifers especially on the western flank of the valleyrnfloor and along large rivers were found to be good groundwater potential zones and wellsrnsunk into these aquifers have fairly good efficiencies and productiVities. Generally, therngroundwater has good chemical quality with the exception high EC (TDS) and N03 values inrnsome areas.rnThe Lake Ashange water does not have similar chemistry to that of the springs that emanaternfrom the western highlands and the groundwater in the valley floor of the Mehoni sub-basin.rnTherefore, it is concluded that the lake may not have significant sub-surface outflow towardsrnthe sub basin.rnLowering of the static water level by about 2m within 2 years time was detected in arnmonitoring well located at the groundwater irrigated field around Werabaye. This could bernattributed to the large-scale pumping from the groundwater and intensive diversion activitiesrnin the upstream areas.rnGenerally, two ground water flow systems were detected. One is in the Mehoni sub-basinrnwhere the groundwater flows from all directions towards the central valley floor withrnprobable groundwater out flow at the southeastern part of the study area. And the other is inrnthe lake Ashange basin where groundwater flows from all dirrections towards the lake.