The study was taken up in Uttara Kannda district of Karnataka to assess the impact of watershed development project on species diversity of trees, shrubs and herbs. The present study indicated that the vegetation in the treated watershed area showed comparatively higher species diversity as compared to that of the untreated area.  Important Value Index (IVI) in tree species Xylia xylocarpa was found to be dominated in the treated  area, while in the untreated area the highest IVI was seen in Strychnos nuxvomica. The  IVI of herbs  was found more in Brassica junecea in the treated area and Datura metel in untreated area. The IVI in case of shrubs in the treated area was highest  in case of Demodiun gangeticum, while that in case of untreated area it was Clerodendrum serratum. In the present study maximum IVI was recorded in the treated area as compared to untreated area. Simpson Index was less in treated as compared to untreated area where as Shannon, Evenness Index and richness index was more in treated area as compared to untreated area.