Abstract. The objective is to assess the suitability of commonly used high-resolution satellite rainfall products (CMORPH, TMPA 3B42RT, TMPA 3B42 and PERSIANN) as input to the semi-distributed hydrological model SWAT for daily streamflow simulation in two watersheds (Koga at 299 km² and Gilgel Abay at 1656 km²) of the Ethiopian highlands. First, the model is calibrated for each watershed with respect to each rainfall product input for the period 2003–2004. Then daily streamflow simulations for the validation period 2006–2007 are made from SWAT using rainfall input from each source and corresponding model parameters; comparison of the simulations to the observed streamflow at the outlet of each watershed forms the basis for the conclusions of this study. Results reveal that the utility of satellite rainfall products as input to SWAT for daily streamflow simulation strongly depends on the product type. The 3B42RT and CMORPH simulations show consistent and modest skills in their simulations but underestimate the large flood peaks, while the 3B42 and PERSIANN simulations have inconsistent performance with poor or no skills. Not only are the microwave-based algorithms (3B42RT, CMORPH) better than the infrared-based algorithm (PERSIANN), but the infrared-based algorithm PERSIANN also has poor or no skills for streamflow simulations. The satellite-only product (3B42RT) performs much better than the satellite-gauge product (3B42), indicating that the algorithm used to incorporate rain gauge information with the goal of improving the accuracy of the satellite rainfall products is actually making the products worse, pointing to problems in the algorithm. The effect of watershed area on the suitability of satellite rainfall products for streamflow simulation also depends on the rainfall product. Increasing the watershed area from 299 km² to 1656 km² improves the simulations obtained from the 3B42RT and CMORPH (i.e. products that are more reliable and consistent) rainfall inputs while it deteriorates the simulations obtained from the 3B42 and PERSIANN (i.e. products that are unstable and inconsistent) rainfall inputs.