Abstract: Gully erosion has become a key disturbance factor in the sloping farmland, particularly in the black soil area of the Northeast China. This is because the gully erosion can damage land resources site off the tractor travel, and thereby threaten the sustainability of crop production. As such, a new technology was introduced to the rehabilitation engineering of gully filling with straw. However, two scientific questions need to be answered in this technique: Firstly, whether the new gully that induced by the surface runoff can change the original site after the rehabilitation. Secondly, whether the collapse that induced by the decomposition of straw bundle can occur in the original site, where the decomposition has existed due to the organic matter of straw. These two problems can also determine the feasibility of the technique. Therefore, in this study, the drainage function and straw decomposition were investigated in a rehabilitated gully, to verify the drainage capacity of the technique, and further to explore the straw decomposition in different rehabilitation years. A rehabilitated gully (47°21′22.52″N, 126°49′56.71″E) was selected, located in Guangrong village, Hailun City, Heilongjiang Province. The capacity parameters were measured, including the soil infiltration, seepage infiltration, water holding of straw bundle, and the drainage. Taking Yinlonghe farm (48°45′N, 126°36′E) as the research area, located in Heihe City, Heilongjiang Province, China, the straw decomposition test was conducted to measure the thickness, bulk density, and components of straw bundle. The results showed that the water storage of straw bundle layer was 463 kg/m3 in the rehabilitated gully bed. The runoff in the rainy season can be completely stored by the straw layer. The sloping farmland after rehabilitation can resist the uniform rainfall intensity of 44 to 80 mm/h. 95% surface runoff was transformed into the underground runoff, indicating a great reduction in the soil erosion induced by surface runoff. From the surface runoff to underground runoff, there was no new gully reformed in the original site. In addition, the thickness of straw bundle layer decreased at an average annual rate of 1.4 cm. The settlement of straw layer can be filled by the spring plough and the sediment deposition in the rainy season. Therefore, there was no collapse occurred in the original site. Furthermore, the decomposition rate of straw component varied in different rehabilitation years. There was a rapid increase in the decomposition rate of hemicellulose and cellulose after 20 years, whereas, the lignin hardly decomposed, where the content ranged from 26.8% to 38.8%. Long term anaerobic environment, water saturation, and half a year freezing period can significantly suppress the decomposition of straw. The technology of rehabilitation from the gully erosion can be widely used for the rehabilitation of 200 000 gullies in the sloping farmland in the black soil area of the Northeast China. The finding can provide a scientific basis for the reclamation of erosion gully.