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Due to the ever-increasing demand on water resource, the pressure on its judicious utilization is also increasing. Besides being precious, this resource is also complex to manage on account of its dynamic behaviour. In India emphasis is being placed on making the local-level users participate in the management of natural resources at the watershed level. Therefore, it is imperative that local-level organizations be strengthened by providing the integrated watershed management tools which are user-friendly, but still use all the scientific knowledge to arrive at the appropriate decisions. This paper demonstrates the use of GIS-based overlay method for local-level planning, incorporating the sustainability aspects of watershed development. A case study has been taken in the Lower Bhangal Micro-watershed of the outer Himalayan range to demonstrate the approach of matrix/ranking and overlay methods to delineate priority areas for watershed management plan.