Catchment system and its interface with atmosphere, lithosphere, hydrosphere, and biosphere assume greater importance to climate conditions. Lake Tana, the biggest basin in the catchment area, is a very important water resource for livelihood of community near and around it. It plays a role in balancing of the microclimate of local areas in the catchment of the lake. Gilgel Abbay River catchment, the study area, is one of the most important components of Lake Tana and contributes more than 40 % of the lake’s water. However, development activities at the catchment areas appear to have affected the local climate and consequently affected the river systems and the lake. The land cover/use status of Gilgel Abbay River catchment in the years 1973, 1986, 1995, and 2008 were examined using landsat images. For the last 30 years, temperature and rainfall data were evaluated for the catchment. These were analyzed by employing the trend and conversion matrix tools, to understand the relationship between the land cover changes and climate conditions. The results have shown that within the last 35 years in the Gilgel Abbay catchment, about 72.3 % of forest, 55 % of grasslands, 47.2 % of wetlands, and 6.3 % of lake areas were converted to farm and settlement lands, which have expanded from 33.5 to 58 %. Parallel to this period within the catchment, there was a decline in rainfall and rise of temperature. Thus, in the catchment within the stated period, there was land conversion which has resulted change in local climate.