Sedimentation from soil erosion is a critical reservoir watershed management issue. Due to the difficulty of field investigations, empirical formulas are commonly used to estimate the soil erosion rate. However, these estimations are often far from accurate. An effective alternative to estimating soil erosion is to analyze the spatial variation of 137Cs inventory in the soil. 137Cs can be adsorbed by the soil and is widely assumed to change its distribution only when disturbed by rainfall and human activities. Thus, 137Cs distributed in soils can be a useful environmental tracer to estimate soil erosion. In this study, the net soil loss estimate is 108,346 t/yr and the gross erosion and net erosion rates are 10.1 and 9 t/ha yr respectively. The sediment delivery ratio is therefore estimated to be 0.9 based on the two erosion rates. Because of the steep hillsides in the watershed, only 10% of the sediment yield stayed in the deposition sites and 90% was transported to the river as the sediment output. Soil erosion estimates from spatial variations of the 137Cs activity in the Baishi river watershed showed satisfactory accuracy when compared to sediment yield data. Using soil 137Cs concentrations is therefore a feasible method for estimating soil loss or deposition in Taiwan. Data sampling, analysis and result of this approach are given in this paper.