Gully erosion is one of the significant soil erosion types and it is the key sediment source in small watershed. It is the foundation to analyze and summarize the dynamic processes of gully formation and development, geometry properties, measuring methods and prediction models for demonstrating the dynamic mechanism of gully erosion, gully control and land resource conservation. The concepts of gully and gully erosion, geometry properties and measuring methods, the key influencing factors, the dynamic processes of gully development, and erosion models were fully reviewed. The concepts were clarified and different methods for gully monitoring were compared. The key factors affecting gully formation and development were quantified. The dynamic mechanism were identified for each sub-process of gully erosion. The structure and main influencing factors of representative gully erosion models were compared. The urgent issues need to be studied in the future were proposed. This review paper is helpful for understanding the generation of gully erosion and the dynamic processes of gully development, promoting the effectiveness of gully erosion control.