Recent advancements in the field of remote sensing have led to the development of high resolution satellite‐based rainfall products to improve the quality of observed rainfall data through proper evaluation and validation process of the products. This study therefore, intended to evaluate the performance of CHIRPS (Climate Hazards Group InfraRed Precipitation Station) satellite‐based rainfall products in Finchaa and Neshe watersheds of Blue Nile Basin. Daily ground‐ and satellite‐based rainfall data are collected from Ethiopian National Meteorological Agency and CHIRPS dataset of CHG (Climate Hazards Group) respectively, for the time slice of 25 years (1991–2015). The performance of CHIRPS product is evaluated using quantitative statistical performance indicators and graphical comparison methods. CHIRPS satellite product tends to slightly overestimate the mean rainfall depth at the study area. A positive strong linear correlation (R = 0.93 and R2 = 0.86) and a smaller amount of noise, bias and error (NSE = 0.84, PBIAS = 0.98%, and RMSE = 46.99 mm) have been found between CHIRPS satellite‐based and the ground‐based rainfall products when compared. The overall results in this study also indicated the good performance of CHIRPS satellite‐based rainfall estimates in maintaining patterns of observed measurements at monthly, seasonal and annual time steps across the watersheds.