ABSTRACT Accelerated erosion caused by human activities is the major triggering factor for the loss of soil and water resources in Ethiopia. Soil erosion is commonly regarded as a major environmental problem that affects the sustainability of agricultural production and downstream reservoir. To facilitate urgent policy intervention in sustainable land management, evaluating the amount of annual soil loss is inevitable. In this study, the Revised Universal Soil Loss Equation (RUSLE) and Geographic Information System (GIS) are integrated to analyse the amount of soil loss in the Neshe Dam Watershed of Ethiopia. The total amount of soil loss from the watershed (33,376 hectares) is about 1,252,935 tons per year. Furthermore, the potential average annual soil loss for the whole watershed is anticipated at 37.54 t ha−1 yr−1. In terms of sub-watersheds, very high soil loss (56.62 t ha−1 yr−1) was observed in sub-watershed B accounts (for 16.3%) and the least (16.06 t ha−1 yr−1) observed in sub-watershed E accounts (for 23.6%). The study concluded that if proper measures are not taken now, the accelerated erosion in the watershed will jeopardize the sustainability of agricultural production within the watershed and energy generated from the dam in the long term.