Technical Abstract: Sediment delivery from hillslopes to rivers is spatially variable and may lead to long-term delays between initial erosion and related sediment yield at the watershed outlet. Consideration of spatial variability is important for developing sound strategies for water quality improvement and soil protection at the watershed scale. Hence, the Soil and Water Assessment Tool (SWAT), was modified and tested in this study to simulate landscape sediment transport capacity. The study area was the steeply sloped Arroio Lino watershed in Southern Brazil. Observed sediment yield data at the watershed outlet were used for the modified model calibration and validation. For the calibration period, the modified model performed better than the unaltered version of SWAT, achieving a Nash–Sutcliffe coefficient (NSE) of 0.7 and -0.1, respectively. Nash-Sutcliffe coefficients were less for the validation period, however, the modified model was higher than the unaltered model (-1.4 and -12.1, respectively). Despite the partly low NSE values, the results of this first test are promising since the model modifications lowered the percent bias in sediment yield from 73 percent to 18 percent. Simulation results for the modified model indicated that approximately 60% of the mobilized soil is being deposited along the landscape before it reaches the river channels. This research demonstrates the altered model’s ability to simulate sediment yield in watersheds with steep slopes. The results suggest that integration of the sediment deposition routine in SWAT increases accuracy in steeper areas, while significantly improving its ability to predict the spatial distribution of sediment deposition areas. Further work is needed with regard to i) improved strategies for spatially distributed sedimentation transport measurements (for improving process knowledge and model evaluation), and ii) extensive model tests in other well instrumented experimental watersheds with differing topographic configurations and land uses.