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Due to the complexity of the landscape in the Loess Plateau region, having more features mutation, it is very difficult to accurately describe the terrain and carry out the terrain feature analysis. And the existing automatic extraction method for drainage network could not meet the requirements, whether in time consumption or calculation accuracy. On base of reviewing the algorithms of automated extraction of stream network from digital elevation models (DEMs), this proposed method ameliorate the D8-algorithm.To classify the sections of the valley extracted by this method, the paper also gives an algorithm of encoding for drainage network. Experiments on the data of the Luoyugou Watershed on the Loess Plateau prove that the algorithm is more efficient than the original one, and drainage network can be extracted easily, which lays the foundation for terrain feature analysis.