Land use/cover change is one of the factors responsible for changing the water balance of the watershed by altering the mag-nitude of surface runoff, interflow, base flow, and evapotranspiration. This study was aimed at evaluating the impacts of land use/cover change on the water balance of Bilate watershed between 1989, 2002, and 2015. The water balance simulation model (WaSiM) was used to access the impacts of land use/cover change on water balance. The model was calibrated (1989–2003) and validated (2007–2015) using the streamflow of at Bilate Tena gauging station. The result of land-use dynamics showed land use/cover change has a significant impact on the water balance of the watershed: on runoff production, base flow, interflow, evapotranspiration, and total simulation flow. In the study watershed, the change in total simulated flow increased by 77.83%; surface runoff, interflow, and base flow increased by 80.23%, 75.69%, and 87.79% respectively; and evapotranspiration decreased by 6% throughout the study period (1989–2015). The results obtained from this study revealed that the watershed is under land/cover change that shows its impacts on hydrological processes and water balance. Thus, effective information regarding the environmental response of land use/cover change is important to hydrologists, land-use planners, watershed management, and decision-makers for sustainable water resource projects and ecosystem services. Therefore, the policy-makers, planners, and stakeholders should design strategies to ensure the sustainability of the watershed hydrology for the sake of protecting agricultural activities, and urban planning and management systems within the watershed area.