Accurate measurement of land-use/land-cover and geomorphometric parameters is important for evaluating watershed conditions, yet these are surprisingly difficult quantities to measure accurately over large areas. Watershed analysis based on the geographic information system (GIS) was carried out in two watersheds in the western development region of Nepal. Land-use maps were prepared after interpretation of 1978 and 1996 aerial photographs. Digital data for deriving geomorphometric parameters were prepared from topographical maps of scale 1:25 000. The dynamics of land-use and land-cover change within the Mardi and Fewa watersheds were investigated by performing spatial analysis of digital land-use maps in ArcView 3.1 desktop environment. There was a net increase in forest cover of 2.4 per cent and 1.1 per cent in the Mardi and Fewa watersheds respectively, with a corresponding decrease in shrub and rainfed agriculture. Land use was found to be highly dynamic with significant internal trading among the land-use classes. A significant area under agriculture in 1978 was found abandoned in 1996 in both watersheds most likely due to increased out migration of the labour force. Geomorphometric parameters such as hypsometric curves, hypsometric integrals (HI), drainage density and length of overland flow were analysed to explain the watershed conditions. The results of geomorphometric analysis revealed that the watersheds have been subjected in the past to high erosion and are still susceptible to lateral surface erosion hence soil degradation. Some suggestion for management can be derived from this study.