The present investigation was an attempt to develop a Spatial Decision Support System (SDSS) for a test Nagwan watershed situated in the Damodar-Barakar catchment in India, the second most seriously eroded area in the world, for not only estimating sediment yields under prevailing resource management systems but also designing a linear programming (LP)-based optimized land-use plan for soil loss reduction in the test watershed. The proposed SDSS was validated on 9 years (1981-1983, 1985-1989, and 1991) of sediment yield data for the test watershed. This showed that the SDSS could mimic the annual dynamics of the total sediment yields at the test watershed outlet with a correlation coefficient of 0.65, model efficiency coefficient of 0.70, mean relative error of -17.97%, and root mean square prediction error of 9.63 t ha^-1. It could also be used as an efficient tool for assessing sediment yields from different parts of the test watershed and for designing a linear programming (LP)-based optimized land-use plan for reduced total sediment yields from the test watershed. The LP-based land-use plan proposed no change in the total areas under paddy, corn, and forest land-use types but suggested their re-distribution within the test watershed, thereby leading to not only a reduction in the test watershed's total sediment yield by about 14.61% but also an increase in its paddy and corn crop productivities by 2.80 and 68.14%, respectively. The proposed LP-based land-use plan for the test watershed could thus lead to an enhanced productivity benefit of about Rs 3735 ha^-1, in monetary terms, from corn crop cultivation at its optimal locations.