Lake Awassa is located in the central main Ethiopian rift valley. The Lake is important water resource in the study area and is used for irrigation and related purposes. Beside its importance, the level of the lake has changed dramatically over the past two decades. Because of this, the lake has attracted considerable attention in recent years especially when the lake flooded the surrounding area including Awassa town which is established adjacent to the lake. Fundamental for understanding the lake level fluctuation requires knowledge of the lake's water balance and its response to human induced and climatic changes in the hydro-logic regime. The present study develops a water balance forecast model for Lake Awassa. The model result shows that the surface runoff and evaporation accounts about 81% and 38% in short term lake level fluctuation but in long term lake level fluctuation precipitation and evaporation accounts 45% and 73%respectively. This is mainly the result of land use/cover changes which causes the runoff to increase.