In this paper, it was based on digital elevation model(DEM) data of 5 meter resolution, which is from DaNangou area, Yan’an, Shanxi. Using the grid module platform of ArcGIS 9.3, the channel systems of research area was extracted. Raster data of canal direction and watershed water catchment area were formed after the original terrain data were pretreated. Then it set the appropriate critical water catchment area value, and extract. ed the river canal system. Finally, it graded the canal system. The results showed that the extracted channel sys. tem was generally consistent with the actual one.