Many studies have noted that gully erosion, the severe stage of soil erosion, has become one of the most challenging environmental problems restricting the long term productivity agriculture and water quality in developing countries. Even though several soil and water conservation practices have been implemented, the effects are far below expectations mainly due to lack of information to identify vulnerable areas for gully erosion. In this study, we specifically tested reliability of the topographic wetness index (TWI) to predict areas sensitive to gully erosion where saturation excess overland flow controls the erosion process. We used Debre Mewi watershed 30 km south of Lake Tana in the head waters of the Blue Nile where upland erosion takes place and gullies are actively forming in downhill locations. Wells were installed to measure groundwater table depths in the gully and in surrounding areas to assess the influence of subsurface flow on gully formation. Using geospatial analysis, TWI was correlated with ground water table depths during rainy months and can be used to estimate gully susceptibility in the studied region when data availability is limited.