Along with the global climate change, gully erosion, flood and drought jointly restrict the sustainable development of arid rangeland in Central Asia. Rainwater harvesting (RWH) system in gully is a flexible practice that alleviate complex environmental problems. In the Kulusitai watershed of Xinjiang, China, our study presented a decision-making system using GIS combined with multi-criteria analysis and a field survey to identify suitability of gully for RWH. The results showed that nearly 40% of rangeland belonged to high runoff potential area, and gullies as the runoff collection channel became the potential site of RWH. The selection of RWH systems depended on catchment environment and gully characteristics. Therefore, based on the unique natural conditions of Xinjiang and successful RWH cases in other regions, we discussed some suitable low-cost RWH techniques to restore degraded grassland and promote community development. Our study will provide some suggestions for ecological restoration and pasture management in arid regions of Central Asia.