A significant concern is the modification and conversion of the land cover in river basins as a consequence of different influences on ecosystems. A hydrological investigation was performed in the Kelani River basin in Sri Lanka using the Soil and Water Assessment Tool (SWAT) to analyze the impact of changes in land use and land cover (LULC) on the hydrological response. In order to calibrate (2003–2012) and validate (2013–2020) the model, input data from four hydrological stations, namely Glencose, Hanwella, Norwood, and Kitulgala, were utilized. Three distinct LULC scenarios were analyzed and compared to the existing urban land pattern. Scenario I involves the conversion of urban land into pasture, Scenario II comprises the conversion of urban land into rubber plantations, and Scenario III entails the conversion of urban land into bare soil. In accordance with the study, the SWAT model's calibration in the Kelani River was successful. The evaluation indices for both the calibration and validation periods were satisfactory at Norwood (R2 = 0.76, NE = 0.88), Hanwella (R2 = 0.83, NE = 0.57), Glencourse (R2 = 0.78, NE = −0.32), and Kitulgala (R2 = 0.69, NE = 0.59). This finding suggests that the SWAT model demonstrated better accuracy in predicting streamflow at a station with high flow compared to stations with low or medium flow conditions. However, the calibrated model did not perform as expected when used to forecast daily streamflow at Glencourse, where the evaluation indices showed an R2 of 0.78 and NE of −0.32. Compared to the current urban land cover, scenario III had the greatest impact on runoff, potential evapotranspiration (PET), and sediment yield, with increases of 14.1%, 15.2%, and 26.3%, respectively. As a consequence of the significant degree of land degradation that was observed throughout the duration of the study, regions in the northern and western parts of the basin have been highlighted as requiring immediate attention for the establishment of vegetation.