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Lakes are of great value to human beings and important for various reasons like regulating the flow of river water, to maintain the eco-system and storage of water during the dry seasons. Lake Haramaya, which is situated at 14 km Northwest of Harer town (UNESCO Site) is one of the famous and beautiful lakes of Ethiopia. It acts as a source of life for human beings and animals. The over exploitation of the lake haramaya for water supply and agricultural purposes has led to its extinction in the last two decades. This study attempts to identify the fluctuations in surface area of Lake Haramaya between 1995 to 2020 by using multi-temporal satellite data. The Landsat 5TM images of 1995, 2000 and 2010, Landsat 7ETM+ image of 2005 and Landsat 8 OLI TIRS images of 2015 and 2020 are analyzed using the Normalized Difference Water Index (NDWI) and Modified Normalized Difference Water Index (MNDWI) methods. These methods are used to quantify the changes in surface area and compared to each other for identifying the suitable method for detecting water bodies. The present study shows that, between 1995 to 2010 the lake lost up to 2.3238 sq.km and almost dried. But, during 2011 to 2020 the lake surface area increased by 2.6946 sq.km. The study states that the lake surface area is fluctuating and MNDWI method is highly reliable in extracting water bodies.