AbstractThe suitability of the Dirma River Basin in Ethiopia for surface irrigation potential development and identification of potentially irrigable sites were the subject of the present study. The river basin area suitability was evaluated based on slope, soil and surface water resource availability using ArcGIS 10.1. Potentially suitable sites for surface irrigation development were evaluated for potato and tomato crops. The reference crop evapotranspiration, effective rainfall, net irrigation and gross irrigation water requirement were estimated using CROPWAT software. The results of the suitability model developed indicated that about 68.3% of the total river basin area falls in marginally to highly suitable categories for surface irrigation development. The water resource availability reveals that due to very high intra‐annual variability in river flows, only 6% of the mean annual flow is available for the period from January to May, and with this up to 30% of land that is suitable for surface irrigation can be irrigated. However, with suitable water storage infrastructure and deficit irrigation practices, utilization of land and water resources of the Dirma River Basin can be increased significantly. Therefore, this study will help decision makers, investors, planners and policymakers at the local, regional and national levels in better identification of profitable and sustainable irrigation investment opportunities in the region. © 2019 John Wiley & Sons, Ltd.