This thesis was intended to Explore Water-Based Tourism Development Potentials of Central Rift valley, Evidences from Koka Water Reservoir. However, there has been lack of empirical studies conducted on this issue globally as well as in Ethiopian context. As a result, this research aimed to assess the potentiality of the study area for water-based tourism development. Mixed research approach, and descriptive and exploratory types of research design were utilized in this study. Both primary and secondary data sources were used for the study. Purposive and simple random sampling techniques were employed to select 238 respondents from concerned offices and local communities. The result indicates that the Koka water reservoir owns various potential tourism resources, such as bird species, fish species, and aquatic animals. Regarding local community perceptions, descriptive statistics (mean and standard deviation) were used, and the result revealed that local communities have positive perceptions that the development of water-based tourism at Koka water reservoir would create more jobs for the local community, increase the standard of living, attract investment to the site, and improve infrastructure and facilities. In addition, principal component analysis was used to extract factors affecting water-based tourism development. The result reveals five factors, such as infrastructure and facilities, accessibility, awareness and training, conservation and protection, and finance and funds. Lastly, multiple regression analysis was directed at measuring the effect of the factors (independent variables) on water-based tourism development. The result shows infrastructure and services had a high effect, followed by conservation and protection, finance and funds, and awareness and training, whereas accessibility had no significant effect on the development of water-based tourism at Koka water reservoir. For multipurpose utilization of reservoir all concerned body should have to work together for the improvement in infrastructures and services, fund rising, conservation and protection. Culture and tourism offices of all level should have to work on awareness creation and proper utilization of water-based tourism potentials of the area.