Daniel V. McCarthy 65, chief of the division of planning in the Interior Department's Bureau of Reclamation until his retirement in 1973, died Tuesday at his home in Arlington.He suffered from a heart ailment.

Mr. McCarthy joined the bureau in 1945 and became planning division chief in 1963. His work involved water resources and river basin development programs.

In 1966, he received Interior's Distinguished Service Award for his role in the development of the Columbia River Basin and Colorado River Storage projects.

Mr. McCarthy was born in Nichols, N.Y. He earned a degree in civil engineering from Pennsylvania State University. His 39 years of government service began in the Tennessee Valley Authority. Later he was with the Army Corps of Engineers.

He came here in 1942 and worked for the National Resources Planning Board and the War Production Board before joining Interior. Since retiring, he had been a consultant to the World Bank.

Mr. McCarthy was a member of the American Society of Civil Engineers and the International Commission on Irrigation and Drainage. He belonged to the Washington Golf and Country Club.

He is survived by his wife, Margaret M., of the home; two daughters, Mrs. Gregory Duggan, of North Canton, Ohio, and Mrs. R.D. Williamson, of Lynchburg, Va.; a brother, Gerald, of Summit, N.J.; a sister, Mrs. Eugene Walsh, of Scranton, Pa., and five grandchildren.