Impaired water quality has been identified as a major factor of degradation of coastal ecosystems in the tropics. Agricultural activities, as well as the spread of invasive plant and animal species cause the increase in suspended sediment and pollutants loading into adjacent streams. High spatial variability of precipitation, topography, and land cover, existing in tropical island environments, makes the hydrologic modeling particularly challenging. The objective of the study was to evaluate the performance of AnnAGNPS (Annualized Non-Point Source Pollution Model), in simulating surface water flow and sediment transport in Hanalei watershed, a 50 km² basin located on the Island of Kauai, Hawaii. Monthly runoff volumes predicted by AnnAGNPS compared well with measured stream flow data (R² = 0.90). Comparison between daily measured and predicted runoff had lower coefficient of correlation (R² = 0.55) and higher variation especially during smaller precipitation events. The model adequately simulated watershed sediment yield. However, for the events of small magnitude, the model generally overestimated sediment load, while the opposite was true for larger events. Areas of the watershed contributing the most to the runoff generation and sedimentation were identified. Overall the model performed reasonably well, and it can be used as a tool on tropical watersheds for comparative assessment, gross estimation of sediment loads, and identification of landscape “hot spots”.