Background: Water induced soil erosion is the most prevailing form of land resources deterioration in the highlands of Ethiopia, where huge amount of fertile soil is being lost annually. The purpose of this study was to estimate and map mean annual soil loss rates in the Gedalas watershed of the Blue Nile Basin, Northeastern Ethiopia. The estimation was carried out by using RUSLE model coupled with local perceptions. Soil, land use/cover, DEM, rainfall and support practice data were used as an input parameters. The raster layers were processed to present the required input parameters in ArcGIS platform and finally the inputs were multiplied together to quantify annual average soil loss rate and generate intensity maps of the watershed. Results: The estimated annual mean soil loss rate of the watershed was found to be 37 t ha −1 year −1 , which is more than two times higher as compared to the maximum tolerable soil loss value (16 t ha −1 year −1) and the annual erosion rates range from 0 to above 935 ton ha −1 year −1. The annual mean soil loss values below 5 ton ha −1 year −1 were rated as very slight, while those above 50 ton ha −1 year −1 were categorized as very severe soil erosion risk. Areas experiencing values between these two were further classified into slight, moderate, and severe erosion zones. Soil loss in more than 1/3rd of the study area (36.4%) was below moderate (< 15 t ha −1 year −1). Nearly one-fourth (25.5%) of the watershed area experienced moderate (between 15 and 30 ton t ha −1 year −1) soil loss values. Only 14% of the watershed areas were classified under severe to extremely severe (> 30 t ha −1 year −1) soil erosion risk zones. While 62% of the watershed still undergoes from very slight to moderate levels of soil loss, yet 72.6% of soil erosion occurred in zones less than 3200 m in elevation which represents more than half (51%) of the total surface area of the watershed. The study also demonstrated that the northeastern parts of the watershed suffer more from high soil erosion risk due to steep slope and rugged landforms of the area. Similarly, 43% and 35% of soil erosion occurred on cropland and grasslands areas, respectively. Conclusion: The quantitative soil loss estimation results and farmers' perception of soil erosion revealed that soil erosion has still remained significant problems in the watershed. The results underscore the urgent need for comprehensive and site-specific SLM practices in the watershed.