Gully erosion is affecting agricultural production, decreasing food security, and causing sedimentation in water bodies in Ethiopia. Therefore, the objectives of this study were to identify the major causes of gully formation and development, to assess the gully erosion and to evaluate the impacts of different gully erosion management practices in Timet watershed in the northwest highlands of Ethiopia. Interview, transect walk, soil sampling, Google earth imagery and field measurements were used for data collection. Statistical Package for Social Science (SPSS), SAS and Arc GIS software’s were used for data analysis. This research was conducted in Timet watershed at an elevation between 2000- 2159 m a.s.l in the northwest of Ethiopia, 2019. As a result, local road formation, surface runoff, topography, free grazing, poor agricultural practices, absence of proper waterway and local drainage channels were found to be important causes of gully formation and development. 3.66 ha of lands and 55197.9 tons of soil were lost from the investigated four gullies. The long term gully erosion rate was found to be 5 t/ha/yr. About 113.15 m3 and 357.7 m3 sediments were trapped by physical and biophysical treatment practices, respectively, which indicates that the integration of physical and biological treatment practices is better than physical treatment practice alone. The loss of soil and agricultural lands has been quantified to indicate the severity of gully erosion on economic and social aspects as well as creates attention on the people and concerned bodies to control it. There could be also used to select proper design and best treatment practices of gully erosion. Specifically, it is used for sustainable planning processes of gully erosion prevention and control measures for the community and the district agricultural offices as well as non-governmental organizations. Gully catchment should be improved with properly designed cutoff drains so that weak points in gully head cut areas could be protected from overland flow. The combine treatment practices of gully erosion are the most important measure to rehabilitate the gully rapidly. Key words/Phrases: Gully Erosion, Soil and Land Loss, Trapped Sediment, Physical Gully Treatment Practice.