Mechanism of gravitational erosion in the slope-gully system of the Loess Plateau was explored with the aid of the finite difference software, FLAC^3D, while numerical simulation of stress field and displacement field of the system and analysis of effect of rising elevation of the erosion base level on slope-gully stability and gravitational erosion was performed. Results show that the slope-gully system tends to stabilize with the rising elevation of the erosion base level; its maximum displacement, safety factor and landslide probability vary within the exponential function distribution range. Its fitting equation is high enough in accuracy to be used in qualitative and quantitative analysis of gravitational erosion of the system. The geometric shape of concave slope can effectively reduce stress concentration, mitigate the likelihood of gravitational erosion, The displacement in the upper part of the slope-gully system appears mainly in the form of “settlement”, tops and slopes of barren hills are the most susceptible to gravitational erosion; with rising elevation of the erosion base level, displacement to whatever direction is decreased to a various degree.