Land use/land cover (LULC) change and climate variability are two major factors controlling hydrological responses. The present study analyzed the separate and combined effects of these two factors on annual surface runoff and evapotranspiration (ET) after validating the selected models in three drought-prone watersheds of the Upper Blue Nile basin: Kasiry (highland), Kecha (midland), and Sahi (lowland). LULC maps were produced from aerial photographs and very-high-resolution satellite images from 1982, 2005/06 and 2016/17. During 1982-2016/17 the area covered by natural vegetation showed dramatic decreases, ranging from 60.2% in Kasiry to 51.8% in Sahi. In contrast, increases in cultivated land ranged from 36.7% in Kasiry to 279.6% in Sahi; the smaller increase in Kasiry resulted from the conversion of a portion of the cultivated land to an Acacia decurrens plantation after 2006. The observed LULC changes over the study period resulted in runoff increases ranging from 4% in Kecha to 28.7% in Kasiry. Climate variability in terms of annual rainfall had no significant effect on estimated runoff; whereas both LULC change and climate variability had significant effect on estimated ET. Though climate variability increased ET from 33.6% in Kecha to 42.1% in Kasiry, the LULC change related to the reduction in natural vegetation had an offsetting effect, which led to overall decreases in ET ranging from 15.8% in Kasiry to 32.8% in Kecha watershed. As changes in LULC and climate are expected to intensify in the future, it is important to study further hydrological responses considering these changes to devise future sustainable land and water management strategies.