Water provision service is one of the most valuable ecosystem services that is important as a key service for the healthfulness and management of water resources. In this study, using the Water Yield model of InVEST software, the water supply and demand in Ilam watershed was modeled. The data related to average annual precipitation, annual evaporation and transpiration, root limiting depth, water available for plants,  land use map, water consumption and estimation of water provision quantity, basin boundary, and subbasins of the watershed were the inputs of this model. The results of model application showed that in Ilam watershed, 45 million cubic meters of water provided annually, with the highest and lowest water provision volumes being in Arghavan (7 million cubic meters) and Chalimar (802 thousand cubic meters) subbasins, respectively. According to results, there are great differences in the water supply and demand in the subbasins of this watershed. Therefore, planner and policymakers should pay attention to this important issue in the layout of land uses and foresee sustainable use of rich forests in the high yield subbasins such as Arghavan subbasin. The results provided in this study, along with showing the importance of modeling surface water demand and its used in macro-policies of water allocation, can function as a guideline and help the managers and planners of Ilam city to adopt reasonable decisions in managing ecosystem and correctly using land in this area.