The impact of climate change on water resources through increased evaporation (due to global warming) combined with regional changes in precipitation characteristics (such as total amount, variability, frequency of extremes) has the potential to affect mean runoff, the frequency and intensity of floods and droughts, soil moisture and water supply for irrigation and hydroelectric power generation. Indian water resources, being heavily dependent on mountain glaciers, river water being shared by neighbouring countries and the annual monsoon being confined to four months only, are seriously susceptible to the climate change. The distribution and availability of water is not uniform across the country throughout the year. The Ganga-Brahmaputra-Meghna (GBM) system is the largest in India with a catchment area of about 110 Mha, which is more than 43% of the cumulative catchment area of all the major rivers in the country. The River Damodar is an important sub catchment of the GBM basin and its three tributaries, the Bokaro, the Konar and the Barakar, form an important tributary of the Bhagirathi-Hughli (a distributory of Ganga) in its lower reaches. The present study is an attempt to assess the impacts of climate change on the water resources of the Damodar basin, which has immense importance in industrial and agricultural scenarios through its river valley project in eastern India. This basin has already witnessed the most severe flood of the last century in 1978. A distributed hydrological model (HEC-HMS) has been used on the Damodar River basin for a controlled flow system, owing to the presence of four reservoirs and one barrage, using HadRM2 daily weather data for the period 2041-2060. The initial analysis has revealed that, under the climate change scenario, the conditions may deteriorate in terms of severity of droughts and intensity of flash floods. Furthermore, seasonal shifts of streamflow pattern, reduction of peak flow and conditions of water stress in meeting the various demands have been observed in the Damodar basin.