The current investigation concerns the impact observed at natural and human environment, due to the implementation of the Aposelemis water supply project, as additional aqueduct of Heraklion and Agios Nikolaos cities, as well as other important tourist areas, in NE Crete, Greece. Aposelemis project is differentiated from standard water supply dam projects, through a special component of an underground tunnel that diverts uphill surface water from Lasithi Plateau into the reservoir. The study concerns the first years of project’s operation, and focuses at four affected areas, namely the Lasithi Plateau upland area, dam’s region, river estuary and water supplied cities. The investigation was based on various site visits, while a significant aspect involves local stakeholders’ observation, opinion and perception on the environmental impact of the project in everyday life, through four detailed questionnaires posed to the affected areas’ population. The recorded consequences were characterized as positive or negative and evaluated according to their size and importance, estimated for the current period and also for the future. Among the main positive effects are urban areas’ drinking water supply and improved upland plateau’s flood water drainage, while among the negative consequences appear multiple water resources’ impacts and feelings of downstream lakeside residents. The investigation indicates the initial environmental impact and sets the basis for further future research towards sustainability.