This study was conducted in the Blue Nile Basin that has a catchment area of 307,189 Km2. The major objective of the study was to investigate effect of watershed delineation on SWAT performance for daily streamflow simulation. Two model setups were developed, which are called scenario1 and scenario2, with 25 and 145 numbers of subbasins, respectively. The sequential uncertainty fitting (SUFI-2) algorithm in the SWAT calibration and uncertainty programs (SWAT-CUP) was used for sensitivity analysis, calibration and validation processes. The sensitivity rank and type of SWAT flow parameters were different for the two scenarios. Calibration and validation were done at multi-gauge stations (at Kessie, El-Diem and Khartoum). Values of the Nash Sutcliffe Efficiency (NSE) and Coefficient of determination (R2) were found to be in between 0.5 and 0.9 after calibration and validation of each scenario. For scenario2, the performance of SWAT in terms of NSE improved by 1% at Kessie, 12% at El-Diem and 7% at Khartoum station relative to scenario1. For the given HRU thresholds (10-20-10 for land use-soil type-slope), the major land uses distribution deviated from the original (i.e., 0% threshold) distribution by some percent. This was due to the regroup of minor land uses into the major land uses. For scenario2, croplands increased by 2.5-4% for catchment areas draining into Kessie, El-Diem and Khartoum gauge station. The increment of the percentage of croplands increased the Curve Number (CN), which is the main parameter that increases the surface runoff. Overall, it is concluded that increasing the number of subbasins has effect on streamflow simulation using SWAT in the Blue Nile Basin. Therefore, for a better SWAT result it is necessary to delineate a basin optimally.