Assessing the impact of land-use/land-cover (LULC) change and nutrient loads on water systems is a key issue, where different water uses raise water quality concerns. This study aimed to enumerate the extent of the LULC change from 1986 to 2018, its measurable impacts on nutrient losses and major pollution areas based on the SWAT in the Bilate catchment, Southern Ethiopia. The sequential uncertainty fitting version two (SUFI-2) algorithm in SWAT-CUP was used in calibration and validation. Calibration and validation showed good agreement between observed and simulated values. Results showed that significant changes in nutrient loss occurred, following the direction of LULC changes between 1986–2002 and 2002–2018. The increase in agricultural land and built-up area accounted for 9.46% and 0.69% of the catchment area, respectively. The total phosphorus and nitrogen loads reached 2.52–1.27 kg/ha and 15.41–31.69 kg/ha between 1986–2002 and 2002–2018. Sub-basins 11, 14, 16, 17, 18 and 55 were the most important areas with nutrient pollution sources identified. The nutrient loads reduce water quality and fish productivity in Lake Abaya. The results of this study improved the understanding of nutrient loading from LULC changes and provided the required knowledge on integrated LULC and water quality management.