Abstract This study integrates the Soil and Water Assessment Tool (SWAT) modelling with multi-criteria decision-making (MCDM) analysis to assess and evaluate the spatial suitability for small hydropower development. The SWAT model is employed to perform a comprehensive hydrological analysis of the study area, which enables a precise characterisation of the hydrological dynamics within the catchment, ensuring that the derived data accurately reflects the physical realities of the region, which, in turn, enhances the reliability of subsequent spatial analyses. The outputs from the SWAT analysis are subsequently utilised as critical inputs for the MCDM analysis. This analysis integrated various spatial and environmental factors, including terrain slope, soil type, land cover, proximity to existing infrastructure, and potential ecological impacts. Integrating these diverse datasets allows the development of comprehensive grid and vector databases and maps delineating areas within the catchment most suitable for small hydropower development. These maps identify optimal locations and balance ecological sensitivity with socio-economic considerations, ensuring that growth is sustainable and beneficial to local communities. The findings from this integrated approach provide valuable insights for regional planners and policymakers, offering a scientifically grounded basis for the strategic development of small hydropower projects. This research significantly contributes to advancing spatial planning methodologies in Serbia, highlighting the importance of integrating advanced hydrological modelling with sophisticated decision-support tools in contemporary environmental management and infrastructure development.