Abstract: Founding the prediction model of watershed soil erosion could provide basis for comprehensive management to a small watershed and make macro decision-making such as land use plans, at the same time it could provide reference for evaluating the effect of small watershed water and soil conservation. Through the analysis of the dynamic process of erosion and the reasonable coupling to space-time relationship between surface – channel and channels, a soil erosion dynamic simulation model of watershed system was established on the basis of continuous flow equation, conservation of momentum equation and mass conservation equation of sediment. Discrete numerical model of watershed system was established by using the FEM to discrete simulation model of soil erosion. VC + + computer simulation program to soil erosion was developed on the basis of determining discrete approach to space-time. In the laboratory artificial simulated rainfall conditions, the run-off flow, run-off sediment and the channel flow dynamics processes at the typical points were got by using this program to simulate soil erosion in model watershed at the case of 50 mm/h rain intensity and 5 min rainfall duration. Comparing simulation results and measuring results at channel outlet, the simulation accuracy of run-off flow, run-off sediment and flow were all more than 80%. The results showed that the soil erosion simulation model was reliable, the discrete numerical method and the preparation of the programs were all entirely feasible. The simulation method presented in this study can provide a basis and reference for simulation of watershed soil erosion.