Water induced soil erosion, relating to improper land management, is a serious land degradation problem in Ultisols that results in rill and gully erosion. The extent of land degradation depends largely on the severity of erosion, which modifies the soil's physical and chemical properties. A detailed understanding of eroded soil properties is essential for assessment of future land management and soil-water conservation. The aim of this research is to evaluate the changes in physico-chemical and mineralogical properties of ultisols associated with gully erosion in East Tennessee. The study area is located in the southern Appalachian Valley and Ridge province, where a thick sequence of red colored clay rich soil (soil series is the Collegedale-Etowah complex) is found on dolomite and limestone bedrock. Four one-meter long soil cores and fifty-two bulk samples were collected from sites of active gully erosion (two cores) and from adjacent non-gullied soil (two cores). The physico-chemical properties assessed for each sample included clay mineralogy using X-ray diffraction (XRD), scanning electron microscopy (SEM) with energy-dispersive X-ray (EDX) methods, pH, cation exchange capacity (CEC), nitrogen, potassium, and phosphorus, particle size distribution (PSD), Atterburg limits, bulk density, moisture content, porosity, saturated hydraulic conductivity (Ks), soil erodibility factor, and swelling potential. According to the USDA, soil texture was classified as silty clay loam and silty clay. Significant differences (p<0.05) existed between eroding and non-eroding soils for the following factors: clay and silt content; porosity Ks, K; Atterberg limits, and swelling potential. Statistically significant correlations were established between clay content and Atterberg limits, bulk density, Ks, and swelling potential. Furthermore, results of X-ray diffraction indicated the presence of quartz, chlorite, illite, kaolinite, kaolinite -smectite expansive clay, hematite and ferrihydrite. Relic crystals of calcite were found in the saprolite horizon. Overall result indicated that selected physico-chemical properties can be used as an indicator of gully erosion in southern Appalachian Ultisols.