Managing water resources is mostly required at watershed scale where the complex hydrology processes and interactions linking land surface, climatic factors and human activities can be studied. Geographical Information System based watershed model; Soil and Water Assessment Tool (SWAT) is applied for study of hydrology of Upper Indus River Basin and assessment the impact of dry periods on environmental flow. The model is calibrated at two stations on Indus and Kabul Rivers. Climatic data of 22 weather stations falling in Pakistan, India, China and Afghanistan has been used for simulation period of 11 years (1994-2004). The model calibration for various water balance components yielded good agreement as indicated by coefficient of determination and Nash-Sutcliffe efficiency. The model output is for analysis of environmental flow in lower reaches and assessment of the Indus Delta ecohydrology. Results revealed that SWAT model can be used efficiently in semi-arid regions to support water management policies.