We derive a sediment budget for Te Weraroa Stream, New Zealand, the principal drainage in a small (29 km2) steepland catchment where gully erosion, triggered by conversion to pasture early in the twentieth century, was ameliorated by reforestation that commenced in 1962. Estimates of sediment production were made using the change in gully area observed in sequential aerial photographs. Channel storage was assessed from stream cross-section surveys. At its peak, gully erosion affected ~6% of the total catchment area. The amount of sediment contributed from gullies declined by 62% as the forest became established, but of the 28.7 Mt of sediment generated by gully erosion between 1950 and 1988, 48% was stored in the channel along the lower 8 km of Te Weraroa Stream. Even if the amount of sediment generated by gully erosion continues to decline, it likely will be many decades before the gravel is released from storage.