The purpose of this study was to develop a model of the Karkheh Dam Reservoir that can (1) simulate temperature and water quality in the reservoir, (2) aid in developing a more in-depth understanding of reservoir circulation and quality as well as the processes affecting these, and (3) carry out a sensitivity analysis to examine the response of the model to specific parameters and coefficients and tributaries concentration. The two-dimensional model CE-QUAL-W2 was used to simulate the hydrodynamics, temperature, and water quality in the Karkheh Reservoir over the years 2005 through 2006. Input data included LakeBathymetry, meteorological conditions, inflow rates, inflow temperature, water quality, and lake outflows. The parameters and coefficients affecting model calibration included PO4, NH4, NO3, DO, and Chlr a concentration. Other simulated constituents included dissolved and particulate organic matter, total suspended and dissolved solids, CBOD, and pH. Calibration and validation of water temperature and water quality relied upon vertical profile data taken in the four parts of the lake. Model calibration was accomplished during May to December 2005 and later evaluated during the period from December 22, 2005 to July 22, 2006. The model results show approximately proper convergence to observed data. After considering the eutrophication process in the Karkhe Reservoir, sensitivity analysis was performed on important parameters affecting temperature and water quality simulation. Also, sensitivity analysis was performed on tributaries concentration to predict system reactions. The results show that phosphorus concentration is a limiting factor in the eutrophication process in the Karkhe Reservoir.