One crucial metric for estimating a reservoirs and dam’s lifespan is sedimentation. It is dependent upon sediment output, which in turn is dependent upon soil erosion. The study area, the Aguat Wuha Dam, was located in Simada woreda, of northwestern parts of Ethiopia. And the study's goal was to use Arc GIS and RUSLE adjusted to Ethiopian conditions to assess potential soil erosion and sediment output from the watershed and identify hotspot locations for appropriate planning for erosion and sedimentation problem management techniques to make the outputs of the dam project more productive and effective for the proposed and suggested purpose of the dam. To predict the geographical patterns of soil erosion in the watershed, the Geographic Information System (GIS) was combined with the revised universal soil loss equation (RUSLE). A soil erosion map was produced using ArcGIS by utilizing all of the model's parameters, including Erosivity, erodibility, steepness, land use, land cover, and supportive practice factors. The watershed's yearly soil loss varies from 0 to 413.86 tons/ha. In order to determine the erosion hotspot area, the average annual soil loss value was discovered to be 9.24 tons/ha/year and was categorized into six erosion severity classes: low, moderate, high, very high, severe, and very severe. These findings indicated that 162.57 ha and 699.17 ha of the watershed were considered to be extremely and severely vulnerable to soil erosion, respectively. It was discovered that the anticipated sediment yield supplied to the outlet varied from 0 to 104.94 tons/ha/year. By standing from the implications of the assessments of the geological, geotechnical, topographical, and socioenvironmental considerations Watershed management is the most effective way to reduce the amount of sediment produced and the amount that enters the reservoir among the several reservoir sedimentation control options that are available.