The physically based distributed hydrological models are ideal for hydrological simulations; however most of such models do not use the basic equations pertaining to mass, energy and momentum conservation, to represent the physics of the process. This is plausibly due to the lack of complete understanding of the hydrological process. The soil and water assessment tool (SWAT) is one such widely accepted semi-distributed, conceptual hydrological model used for water resources planning. However, the over-parameterization, difficulty in its calibration process and the uncertainty associated with predictions make its applications skeptical. This study considers assessing the predictive uncertainty associated with distributed hydrological models. The existing methods for uncertainty estimation demand high computational time and therefore make them challenging to apply on complex hydrological models. The proposed approach employs the concepts of generalized likelihood uncertainty estimation (GLUE) in an iterative procedure by starting with an assumed prior probability distribution of parameters, and by using mutual information (MI) index for sampling the behavioral parameter set. The distributions are conditioned on the observed information through successive cycles of simulations. During each cycle of simulation, MI is used in conjunction with Markov Chain Monte Carlo procedure to sample the parameter sets so as to increase the number of behavioral sets, which in turn helps reduce the number of cycles/simulations for the analysis. The method is demonstrated through a case study of SWAT model in Illinois River basin in the USA. A comparison of the proposed method with GLUE indicates that the computational requirement of uncertainty analysis is considerably reduced in the proposed approach. It is also noted that the model prediction band, derived using the proposed method, is more effective compared to that derived using the other methods considered in this study. © 2018, Springer-Verlag GmbH Germany, part of Springer Nature.