Hydrological impacts of human activities and climate variability on Ketar and Meki watersheds of Lake Ziway basin, Ethiopia were studied using the soil and water assessment tool. Three land-use change and two climate variability scenarios were considered to analyze the separate and combined impacts on annual water balance, monthly streamflow, and spatial distributions of evapotranspiration and water yield. The evaluation showed that changes in land use resulted in an increase in annual surface runoff and water yield for Ketar watershed and an increase in annual ET for Meki. Similarly, the climate variability resulted in a decrease in annual ET, surface runoff, and water yield for Ketar watershed and a decrease in ET for Meki. Overall, climate variability has greater impacts on the monthly streamflow compared to land-use change impacts. Similarly, greater sensitivity in hydrologic response was observed for Ketar watershed compared to Meki watershed.