Severe erosion of irreplaceable topsoil in Indonesia decreases agricultural productivity, requiring annual rice imports amounting to 2.6 million metric tons. The Panawangan Pilot Watershed Project was designed to reverse this trend by establishing soil and water conservation practices capable of maintaining high production levels in the dryland farms of the Citanduy River Basin. This report evaluates the project in terms of its soil conservation practices, agricultural and community development programs, economics, and participating agencies. To reverse topsoil erosion in dryland areas caused by poor land use and increasing population pressures, the Panawangan Project has promoted improved soil conservation practices such as bench terraces, waterways, gully plugs, cutthroat flumes, and sediment traps, and has begun collecting soil erosion data. The project has also initiated an agricultural development program consisting of improved agronomic practices such as variety and fertility trials and multiple and monoculture cropping; a grass revegetation program; planting of trees as cash crops and for lumber and fuel; and livestock, beehive, and fish pond production programs. Besides providing technical assistance to farmers in the above and other areas, the project has actively engaged farmers in project implementation through community and farmer training programs, including special sessions to inculcate the project's basic concepts, especially by convincing farmers that the project will help increase farm production. Consultants have coordinated the activities of the wide range of local and national Indonesian agencies and research institutes involved in implementing this USAID-supported project. The project's most recent development (March 1979) has been the establishment of nine mini-watershed demonstration sites. Government use of these pilot sites as a means of extending the Panawangan Project's successes is recommended. Also recommended is a low-interest loan program to enable dryland farmers to finance the inputs such as improved crop varieties and access to cooperatives and technical assistance which are required to increase production. A 31-item bibliography (1954-78) is appended.