Changes in LULC (land use land cover), which significantly influence the spatial and temporal distribution of hydrological processes and water resources in general, have a substantial impact on hydropower generation. The utilization of an optimization approach in order to analyze the operation of reservoirs is an important concern in the planning and management of water resources. The SWAT (Soil and Water Assessment Tool) and the HEC-ResPRM (Hydrologic Engineering Center reservoir evaluation system Prescriptive Reservoir Model) were combined to model and optimize the Nashe hydropower reservoir operation in the Blue Nile River Basin (BNRB). The stream flow into the reservoir was determined using the SWAT model, considering the current and future impacts of LULC changes. The HEC-ResPRM model has been utilized in order to generate the optimal hydropower reservoir operation by using the results of the SWAT calibrated and validated stream flow as input data. This study proposes a method for integrating the HEC-ResPRM and SWAT models to examine the effects of historical and future land use land cover change on the watershed’s hydrological processes and reservoir operation. Therefore, the study aimed to investigate the current and future optimal reservoir operation scenarios for water resources management concerning hydropower generation under the effect of LULC changes. The results reveal that both the 2035 and 2050 LULC change scenarios show the increased operation of hydropower reservoirs with increasing reservoir inflows, releases, storage, and reservoir elevation in the future. The effects of LULC change on the study area’s hydrological components reveal an increase in surface runoff until 2035, and its decrease from 2035 to 2050. The average annual reservoir storage and elevation in the 2050 LULC scenario increased by 7.25% and 2.27%, respectively, when compared to the current optimized scenario. Therefore, changes in LULC have a significant effect on hydropower development by changing the total annual and monthly reservoir inflow volumes and their seasonal distribution. Reservoir operating rule curves have been commonly implemented in the operation of hydropower reservoirs, since they help operators to make essential, optimal decisions with available stream flow. Moreover, the generated future reservoir rule curves can be utilized as a reference for the long-term prediction of hydropower generation capacity, and assist concerned authorities in the successful operation of the reservoir under the impact of LULC changes.