Zayandeh-Rud River Basin is one of the most important basins in central Iran, which has been continually challenged by water stress during the past 60 years. This study evaluates climate change impacts on the basin’s water resources during the 2015-2044. A multi-model ensemble scenarios framework is used to deal with uncertainties in climate change projections. On average, the monthly temperature in the upper sub-basin of Zayandeh-Rud River Basin is expected to increase by 0.46-0.76 o C under climate change. Annual precipitation is expected to decrease by 14-38%. Maximum monthly precipitation reduction (6-55%) is expected to occur in winter while monthly precipitation might increase in some other months. Global warming is expected to reduce the Zayandeh-Rud’s peak stream flow and the amplitude of its seasonal range. One of the main objectives of this study is to evaluate the reliability of inter-basin water transfer to meet the growing water demand in the Basin. A system dynamics model is developed to capture the interrelationships between different sub-systems of the river basin, namely the hydrologic, socioeconomic, and agricultural sub-systems. The results from simulating a range of possible policy options indicate that supplying more water to the basin without considering the dynamics of the interrelated problems will eventually lead to increased water demand. It is demonstrated that inter-basin water transfer is an inadequate water management policy, causing significant unintended side effects in the Zayandeh-Rud River Basin management system. In particular, policy makers should consider minimizing agricultural water demand through changing crop patterns as an effective policy solution for the basin’s water problems. Keywords: Water resource management, Climate change, Water transfer, System dynamics, Zayandeh-Rud, Iran