Water scarcity is a prevalent issue all over the world. Growing water abstractions combined with uncertain effects of climate increase competition for scarce water resources worldwide, especially in arid and semiarid regions. It is crucial to assess and manage available water resources to ensure its sustainability. There is a need for integrated water management at a watershed scale. Watershed models are a useful tool to support sustainable water management and investigate effects of hydrologic responses at various scales under climate change conditions and to simulate effects of the management decisions. This study aims to assess the sustainability of water resources in the Tuul River Basin in Mongolia using SWAT (Soil Water Assessment Tool) model to understand ecohydrological processes in the basin. The model is used to analyze the trends in water usage on a watershed and subwatershed basis. The water supply and demand dynamics at each sub watershed levels are analyzed to develop a sustainability index based on specific criteria of water sustainability. Sustainability index was used for better water management by targeting areas of the watershed. Using the analysis, strategies for water demand management for the Tuul River basin area were developed. I expect the results of the study with transform water resource situation in the region through better information on the dynamics of the system and will help in alleviating water issues in similar regions of the country and of the world. The model can be a useful tool to support decision makers and to simulate and analyze the effects of water management practices.