Sand and gravel materials are often used in Ethiopia's construction sector. However, the impacts of sand mining on the water body's habitat and biodiversity are not yet considered in the country. In this paper, we study how sand mining activities at Lake Tana and its inflowing rivers affect the environment and spawning grounds of the endemic Labeobarbus species. We measured physico‐chemical parameters in‐situ and developed structured questionnaires to collect primary data on the fishery and sand mining. We found significant differences in conductivity, total dissolved solids and temperature among sampling sites (P < 0.05). Majority (>90 per cent) of the respondents confirmed the drastic physical changes in the rivers and a severe decline in fish production. The study revealed that the ecology of the mined rivers was seriously affected by sand mining, which interfered with migratory routes of fishes and resulted in loss of their spawning grounds. The unregulated sand mining also conflicted with the interests of the fisheries management and environment. Thus, urgent policy intervention is needed to protect the ever‐declining Labeobarbus species of Lake Tana and the environment.