Abstract: Farmland terracing is an effective measure for the improving of eco-environment and the reducing of soil and water loss on the Loess Plateau.This paper takes Yangou Watershed as a case study for research on benefits of farmland terracing. Using daily meteorological data of Yan'an Station in 2005 and data of terrain features,soil and land use of Yangou Watershed,this research simulates and analyzes the benefits of increasing yield and soil and water conservation under different topographic conditions by the aid of WIN-YIELD software and applies an empirical analysis on the effects of farmland terracing in Yangou Watershed.The results show that the bigger the gradient of farmland,the more benefits of increasing yield and soil and water conservation.The slope farmland less than 5° should not be terraced.The slope farmland more than 15° should be terraced as early as possible.