The objective of this paper is to study the impact of the mesh size of the digital elevation model (DEM) on terrain attributes within an Annualized AGricultural NonPoint Source pollution (AnnAGNPS) Model simulation at watershed scale and provide a correction of slope gradient for low resolution DEMs. The effect of different grid sizes of DEMs on terrain attributes was examined by comparing eight DEMs (30, 40, 50, 60, 70, 80, 90, and 100 m). The accuracy of the AnnAGNPS stimulation on runoff, sediments, and nutrient loads is evaluated. The results are as follows: (1) Rnoff does not vary much with decrease of DEM resolution whereas soil erosion and total nitrogen (TN) load change prominently. There is little effect on runoff simulation of AnnAGNPS modeling by the amended slope using an adjusted 50 m DEM. (2) A decrease of sediment yield and TN load is observed with an increase of DEM mesh size from 30 to 60 m; a slight decrease of sediment and TN load with the DEM mesh size bigger than 60 m. There is similar trend for total phosphorus (TP) variation, but with less range of variation, the simulation of sediment, TN, and TP increase, in which sediment increase up to 1.75 times compared to the model using unadjusted 50 m DEM. In all, the amended simulation still has a large difference relative to the results using 30 m DEM. AnnAGNPS is less reliable for sediment loading prediction in a small hilly watershed. (3) Resolution of DEM has significant impact on slope gradient. The average, minimum, maximum of slope from the various DEMs reduced obviously with the decrease of DEM precision. For the grade of 0∼15°, the slopes at lower resolution DEM are generally bigger than those at higher resolution DEM. But for the grade bigger than 15°, the slopes at lower resolution DEM are generally smaller than those at higher resolution DEM. So it is necessary to adjust the slope with a fitting equation. A cubic model is used for correction of slope gradient from lower resolution to that from higher resolution. Results for Dage watershed showed that fine meshes are desired to avoid large underestimates of sediment and total nitrogen loads and moderate underestimates of total phosphorus loads even with the slopes for the 50 m DEM adjusted to be more similar to the slopes from the 30 m DEM. Decreasing the mesh size beyond this threshold does not substantially affect the computed runoff flux but generated prediction errors for nitrogen and sediment yields. So the appropriate DEM will control error and make simulation at acceptable level.