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Seasonal predictions of river flow can be exploited among others to optimise hydropower energy generation, navigability of rivers and irrigation management to decrease crop yield losses. This paper is the first of two papers dealing with a physical model-based system built to produce probabilistic seasonal hydrological forecasts, applied here to Europe. This paper presents the development of the system and the evaluation of its skill. The variable infiltration capacity (VIC) hydrological model is forced with bias-corrected output of ECMWF's seasonal forecast system 4. For the assessment of skill, we analysed hindcasts (1981-2010) against a reference run, in which VIC was forced by gridded meteorological observations. The reference run was also used to generate initial hydrological conditions for the hindcasts. The skill in run-off and discharge hindcasts is analysed with monthly temporal resolution, up to 7 months of lead time, for the entire annual cycle. Using the reference run output as pseudo-observations and taking the correlation coefficient as metric, hot spots of significant theoretical skill in discharge and run-off were identified in Fennoscandia (from January to October), the southern part of the Mediterranean (from June to August), Poland, northern Germany, Romania and Bulgaria (mainly from November to January), western France (from December to May) and the eastern side of Great Britain (January to April). Generally, the skill decreases with increasing lead time, except in spring in regions with snow-rich winters. In some areas some skill persists even at the longest lead times (7 months). Theoretical skill was compared to actual skill as determined with real discharge observations from 747 stations. Actual skill is generally substantially less than theoretical skill. This effect is stronger for small basins than for large basins. Qualitatively, the use of different skill metrics (correlation coefficient; relative operating characteristics, ROC, area; and ranked probability skill score, RPSS) leads to broadly similar spatiooral patterns of skill, but the level of skill decreases, and the area of skill shrinks, in the following order: Correlation coefficient; ROC area below-normal (BN) tercile; ROC area above-normal (AN) tercile; ranked probability skill score; and, finally, ROC near-normal (NN) tercile.