Watershed management as a consensus-building process demands a holistic integrative approach to consider the impacts of various human activities in a watershed on water resources and other related natural resources. The challenge of effectively integrating scientific information from different disciplines into watershed environmental decision making process remains an outstanding challenge for environmental practitioners. In this research, the author argues that a collaborative online Virtual Organization (VO) based Watershed Management Spatial Decision Support System (SDSS) capable of integrating distributed databases and computational models offers superior opportunities for holistic watershed management. This system can utilize the latest Grid computing technology and provide an effective way to embed science in the decision making process by improving the communication between the scientific and the policy sector and between decision-makers and involved stakeholders and translating often complicated modeling results into an easy to understand format for environmental decision makers. The requirement analysis for a VO-based watershed management SDSS is conducted first. A general Internet-based integration framework for the VO-based watershed management SDSS is then conceptualized based on the requirements specified. The implementation of an example VO-based watershed management SDSS within this framework for sediment runoff reduction in two watersheds in northern Indiana is described in detail to illustrate the advantages of VO-based watershed management SDSS. The parallelization of a selected water quality model and subsequent performance analysis demonstrates how Grid computing technology can be utilized as underlying technical infrastructure for a VO-based watershed management SDSS. Finally, design, implementation and application of a new fundamental DEM-based flow analysis algorithm are reported and statistical analysis of application results are done to show its improvement over existing methods. The integration of this new algorithm into VO-based watershed management SDSS can benefit decision makers and other users immediately.