The extraction of drainage network and basin is of significance to the establishment of digital watershed and watershed hydrology analysis. Based on SRTM DEM data and ground water overflow model provided in the Hydrology tools of ArcGIS 9.3, the flow direction, flow accumulation, drainage network and basin boundary of the Panlonghe River basin were extracted. With the help of Google Earth and factual drainage network on 1∶4000000 scale downloaded from national fundamental geographic information system, the extraction of drainage network was verified and the results shows that the extraction results can match practice closely with 1.32% relative error of drainage area.