Digital elevation model (DEM) of a watershed forms key basis for hydrologic modelling and its resolution plays a key role in accurate prediction of various hydrological processes. This study appraises the effect of different DEMs with varied spatial resolutions (namely TOPO 20 m, CARTO 30 m, ASTER 30 m, SRTM 90 m, GEO-AUS 500 m and USGS 1000 m) on hydrological response of watershed using Soil and Water Assessment Tool (SWAT) and applied for a case study of Kaddam watershed in India for estimating runoff and sediment yield. From the results of case study, it was observed that reach lengths, reach slopes, minimum and maximum elevations, sub-watershed areas, land use mapping areas within the sub-watershed and number of HRUs varied substantially due to DEM resolutions, and consequently resulted in a considerable variability in estimated daily runoff and sediment yields. It was also observed that, daily runoff values have increased (decreased) on low (high) rainy days respectively with coarser resolution of DEM. The daily sediment yield values from each sub-watershed decreased with coarser resolution of the DEM. The study found that the performance of SWAT model prediction was not influenced much for finer resolution DEMs up to 90 m for estimation of runoff, but it certainly influenced the estimation of sediment yields. The DEMs of TOPO 20 m and CARTO 30 m provided better estimates of sub-watershed areas, runoff and sediment yield values over other DEMs.