Soil erosion is the main drivers in the world and Ethiopia in particular. This study has been conducted at Dijo watersheds in the Rift valley Basins of Ethiopia to estimate soil erosion rate and identify erosion hotspot areas for proper planning using Geographic Information System and Universal Soil Loss Equation adapted to Ethiopian condition. 64 years mean annual rainfall data for estimating erosivity factor, digital soil map for estimating soil erodibility factor, Digital Elevation Model for estimating topographic (LS) factor, Land use land cover for cover factor detection from Ethiopian ministry of water resources. The result reveals that the soil loss ranges from 0 ton/ha/year in flat slope to 38.09 ton/ha/year from steep slopes. The average soil loss rate is 2.2 tons per hectare per year and has been classified into three erosion severity classes as very low, low and moderate. The result also reveals that most of the watershed erosion severity evaluated under very low and low soil erosion severity classes covering 97.3% of the watershed areas which is due to the effect of mixed plantation of various tree and terraces. However, moderate soil erosion in the upper parts of the watershed could be due to the inherent characteristics of vertisols, lack of vegetation cover and terraces which should be given first priority for conservation interventions. From the gross soil erosion, 43,762 ton/year sediment yields have been estimated at watershed outlet. Policy aim at keeping land productivity will need to focus to reduce low and moderate soil erosion through terracing, inter-cropping, contour farming, strip cropping, conservation tillage, mulching and biological stabilizers based on their slope range, soil type and land use type. The current finding on erosion was evaluated based on the past 10 years land use land cover scenario; therefore, soil erosion might be reduced if the current land use land cover scenario considered. Finally, the integration of USLE and GIS is an effective tool in mapping the spatial distribution of soil erosion from the entire watershed. The moderate and low soil erosion severity areas should be managed through terracing, inter-cropping, contour farming, strip cropping, conservation tillage, mulching and biological stabilizers based on their slope range, soil type and land use type. Free grazing and cultivation of steep slope(Northern parts) contributed for moderate soil erosion in the watershed should be managed by cut–carry system, limiting the number of cattle units to be grazed in the specific plot of land and leaving the marginal steep slope areas with no ground covers for natural regeneration. Finally, the current finding on erosion was evaluated based on the past 10-year land use land cover scenario. Therefore, the soil erosion could be reduced if the current land use land cover scenario is considered.