Changes in land cover, including deforestation, can have significant effect on watershed hydrology. We used hydrological model with distributed parameters to evaluate the effect of simulated deforestation on water balance components in the watershed Ulička (97 km2, 84.3% forest cover) located in the eastern Slovakia. Under the current land cover, average interception accounted for 21.1% of the total precipitation during the calibration period 2001-2013. Most of the precipitation (77%) infiltrated into the soil profile, and less than half of this amount percolated into the ground water aquifer. The surface runoff accounted for 1.2% of the total precipitation only, while the interflow accounted for ca. 12%. The largest proportion of the precipitation contributed to the base flow (23%). Watershed`s deforestation induced significant decrease in the interception and evapotranspiration (by 76% and 12%, respectively). At the same time, total runoff, surface runoff, interflow and base flow increased by 20.4, 38.8, 9.0 and 25.5%, respectively. Daily discharge increased by 20%. The deforestation significantly increased peak discharge induced by a simulated extreme precipitation event with the recurrence interval of 100 years. In the deforested watershed, the peak discharge was higher by 58% as compared with the current land cover. Peak discharge occurred in 432 minutes with the current land cover and in 378 minutes with deforestation, after the precipitation event had started. The presented assessment emphasized the risk of adverse effect of excessive deforestation on watershed hydrology. At the same time, the developed model allows testing the effect of other land cover scenarios, and thus supports management in the investigated watershed.