A daily stochastic streamflow generation model is presented, which successfully replicates statistics of the historical streamflow record and can produce climate-adjusted daily time series. A monthly climate model relates general circulation model (GCM)-scale climate indicators to discrete climate-streamflow states, which in turn control parameters in a daily streamflow generation model. Daily flow is generated by a two-state (increasing/decreasing) Markov chain, with rising limb increments randomly sampled from a Weibull distribution and the falling limb modeled as exponential recession. When applied to the Potomac River, a 38,000 km2 basin in the Mid-Atlantic United States, the model reproduces the daily, monthly, and annual distribution and dynamics of the historical streamflow record, including extreme low flows. This method can be used as part of water resources planning, vulnerability, and adaptation studies and offers the advantage of a parsimonious model, requiring only a sufficiently long historical streamflow record and large-scale climate data. Simulation of Potomac streamflows subject to the Special Report on Emissions Scenarios (SRES) A1b, A2, and B1 emission scenarios predict a slight increase in mean annual flows over the next century, with the majority of this increase occurring during the winter and early spring. Conversely, mean summer flows are projected to decrease due to climate change, caused by a shift to shorter, more sporadic rain events. Date of the minimum annual flow is projected to shift 2–5 days earlier by the 2070–2099 period.