Assessing the spatiotemporal dynamics of land use land cover (LULC) change on water resources is vital for watershed sustainability and developing proper management strategies. Evaluating LULC scenarios synergistically with hydrologic modeling affords substantial evidence of factors that govern hydrologic processes. Hence, this study assessed the spatiotemporal effects and implications of LULC dynamics on groundwater recharge and surface runoff in Gilgel Gibe, an East African watershed, using the Soil and Water Assessment Tool (SWAT) model. Three different LULC maps (2000, 2010, and 2020) were derived from Landsat images, and the comparisons pointed out that the land-use pattern had changed significantly. The agricultural land and grassland cover increased by 3.76% and 1.36%, respectively, from 2000 to 2020. The implications acquired for 2000 show that forested land covers decreased by 5.49% in 2020. The SWAT simulation process was executed using a digital elevation model, soil, LULC, and weather data. The model was calibrated and validated using streamflow data to understand the surface runoff and groundwater recharge responses of each Hydrologic Response Units on reference simulation periods using the Calibration and Uncertainty Program (SWAT-CUP), Sequential Uncertainty Fitting (SUFI-2) algorithm. The observed and simulated streamflows were checked for performance indices of coefficient of determination (R2), Nash–Sutcliffe model efficiency (NSE), and percent bias (PBIAS) on monthly time steps. The results show that there is good agreement for all LULC simulations, both calibration and validation periods (R2 & NSE ≥ 0.84, −15 < PBIAS < +15). This reveals that for the LULC assessment of any hydrological modeling, the simulation of each reference period should be calibrated to have reasonable outputs. The study indicated that surface runoff has increased while groundwater decreased over the last two decades. The temporal variation revealed that the highest recharge and runoff occurred during the wet seasons. Thus, the study can support maximizing water management strategies and reducing adverse driving environmental forces.