Climate change is likely to have severe effects on water availability in Ethiopia. The aim of the present study was to assess the impact of climate change on the Gilgel Abay River, Upper Blue Nile Basin. The Statistical Downscaling Tool (SDSM) was used to downscale the HadCM3 (Hadley centre Climate Model 3) Global Circulation Model (GCM) scenario data into finer scale resolution. The Soil and Water Assessment Tool (SWAT) was set up, calibrated, and validated. SDSM downscaled climate outputs were used as an input to the SWAT model. The climate projection analysis was done by dividing the period 2010-2100 into three time windows with each 30 years of data. The period 1990-2001 was taken as the baseline period against which comparison was made. Results showed that annual mean precipitation may decrease in the first 30-year period but increase in the following two 30-year periods. The decrease in mean monthly precipitation may be as much as about -30% during 2010-2040 but the increase may be more than +30% in 2070-2100. The impact of climate change may cause a decrease in mean monthly flow volume between -40% to -50% during 2010-2040 but may increase by more than the double during 2070-2100. Climate change appears to have negligible effect on low flow conditions of the river. Seasonal mean flow volume, however, may increase by more than the double and +30% to +40% for the Belg (small rainy season) and Kiremit (main rainy season) periods, respectively. Overall, it appears that climate change will result in an annual increase in flow volume for the Gilgel Abay River. The increase in flow is likely to have considerable importance for local small scale irrigation activities. Moreover, it will help harnessing a significant amount of water for ongoing dam projects in the Gilgel Abay River Basin.