Land degradation is a series problem in Ethiopia highlands, particularly in Blue Nile River Basinrnreflected in the form of soil erosion and soil fertility decline from time to time. Beshilo watershed isrnone of the major Blue Nile River Basin tributary, which covers 5,700 km2. The effect of watershedrncharacteristics on Stream flow of Beshilo watershed were evaluated by distributed physically basedrnhydrological model known as soil and water assessment tool (SWAT) model. The model was usedrnfor detail evaluation of the watershed characteristics on stream flow and the effects of physicalrnwatershed characteristics were analyzed and character which have higher effect on stream flow werernidentified and also identify model remedial measure for most stream flow generation in thernwatershed. The model was calibrated and validated by transferred flow data from gauged upperrnreaches of Gummara watershed to ungauged Beshilo watershed. The model was calibrated for thernperiod from 1999-2008 and validated for the period from 2009-2014. The performance of the modelrnwas evaluated on the basis of performance rating criteria, coefficient of determination, and Nash &rnSutcliff efficiency on monthly based value, the coefficient of determination (R2) and Nash- Sutclifferncoefficient was 0.77 and 0.80 for calibration period, 0.83 and 0.84 for validation period. The overallrnperformance of the models gives good result and the effect of watershed characteristics on streamrnflow were evaluated and tested by created different scenarios. The land use land cover changernscenario, the climate characteristics and the slope change scenario are developed, from the land usernland cover change analysis, it was found that has been a substantial decline of forest land, shrubrnland, grass land and expansion of agricultural land. The mean annual stream flow at 2004 LULCrnwere increase by 7.4 % compared from 1996 LULC and increased by 6.8 % compare from 2013rnLULC. Whereas compared the two recent LULC 2004 and LULC2013, at 2013 LULC the streamrnflow decrease by 2.3 %, this result show that LULUC change was affect the stream flow in thernwatershed. And the other scenario were developed by increasing the average tributary slope by 5%rnrate and decrease by 5% rate, the annual stream flow averagely increased by 2.1% and decreased byrn1.8 % respectively. Whereas the climate effect was observed by changing the climate data with 10rnyear interval, the model output clearly demonstrate physical watershed characteristics affect thernstream flow, the land use land cover change was highly affects the stream flow in Beshilo watershed.rnSo, to reduce the stream flow in the study area land use land cover management is important.