All water storage structures constructed on natural rivers are subjected to reservoir sedimentation. The reservoir sedimentation is filling of the reservoir behind a dam with sediment carried into the reservoir by streams. The sediment particles which originate from erosion processes in the catchment are propagated along with the river flow. When the flow of a river is stored in a reservoir, the sediment settled down in the reservoir and reduces its capacity. Decrease in the storage capacity of a reservoir beyond a limit hampers the purpose for which it was constructed. Therefore, assessment of sediment deposition becomes very important for the management and operation of such reservoirs. Some conventional methods, such as hydrographic survey and inflow-outflow approaches, are being used to estimate the sediment deposition in a reservoir, but these methods are tedious, time-consuming and costly. Consequently, in this study, a remote sensing data based digital image processing technique was used to assess the sedimentation in Pong and Bhakra reservoirs, located in foothill of Western Himalayas, India. Seven dates of IRS-(P6) LISS-III satellite data from maximum to minimum reservoir level were used to assess temporal and spatial patterns of reservoirs. The water spread areas of the reservoirs were assessed by using a band rationing technique i.e. Normalized Difference Water Index (NDWI). Furthermore, the revised capacities of the reservoirs between minimum and maximum levels were computed using the trapezoidal formula. From the analysis, it has been observed that the live storage capacity of Pong Reservoir, due to sedimentation, was estimated as 632.84Mm3 in last 35 years (1974–2009), whereas it was determined as 802.34Mm3 for Bhakra reservoir in the span of 46 years (1963–2009). Further, the sedimentation rate in the Pong reservoir was calculated as 18.08Mm3/year, while for the Bhakra reservoir it was 17.46Mm3/year. These sedimentation rates are comparable with the hydrographic survey analysis.