Ethiopia is endowed with a substantial amount of water resources. The country’s renewable surface and ground water amounts 123 and 2.6 billion cubic meters per annum, respectively, but its distribution shows high temporal and spatial variation. The Ministry of Water Resources of Ethiopia (MoWR) planned to develop a digital hydrologic data model that supports management of the country’s water resources. The purpose of this project is to use the Arc Hydro data model organize and manage water resource data in Ethiopia. To accomplish this, raw Shuttle Radar Topographic Mission (SRTM) data was processed and a 90m*90m Digital Elevation Model (DEM) was created. Second, drainage lines and watersheds were created using the Arc Hydro tools. Third, six hydro administrative regions were identified based on the flow direction of the streams. This project has shown that Arc Hydro is an effective tool for storing and analyzing hydrologic information for very large areas