This paper presents a new method for extracting flow directions, contributing (upslope) areas, and nested catchments from digital elevation models in lake-dominated areas. Existing tools for acquiring descriptive variables of the topography, such as surface flow directions and contributing areas, were developed for moderate to steep topography. These tools are typically difficult to apply in gentle topography owing to limitations in explicitly handling lakes and other flat areas. This paper addresses the problem of accurately representing general topographic features by first identifying distinguishing features, such as lakes, in gentle topography areas and then using these features to guide the search for topographic flow directions and catchment marking. Lakes are explicitly represented in the topology of a watershed for use in water routing. Nonlake flat features help guide the search for topographic flow directions in areas of low signal to noise. This combined feature-based and grid-based search for topographic features yields improved contributing areas and watershed boundaries where there are lakes and other flat areas. Lakes are easily classified from remotely sensed imagery, which makes automated representation of lakes as subsystems within a watershed system tractable with widely available data sets. ¿ 1998 American Geophysical Union