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Three sites on red earth soils were examined at Yathong Nature Reserve and 'Coan Downs' in central- western New South Wales. The sites represented a gradient in soil surface condition from a stable, uneroded and productive site, supporting moderately dense perennial grasses (site 1) to a moderately unstable and degraded site with few perennials and evidence of erosion (site 3). The hydrological characteristics of the three sites were measured using a rainfall simulator on plots with varying vegetation cover. Water ponded earlier at the degraded site, and run-off and sediment removal increased as the soil surface became more degraded. Associated with this was an increase in the importance of vegetation cover, and a decrease in the importance of soil physico-chemical variables as descriptors of soil hydrological properties. The results are consistent with the notion that vegetation plays a more important role in maintaining soil hydrological processes as the soil surface becomes more degraded.