Rills and ephemeral gullies are major sources of sediment yet their development is not well understood. Lateral flow over water-restricting horizons often occurs through soil pipes. It has been postulated that pipe flow initiates the development of ephemeral gullies when pipes collapse due to tunnel scour erosion and that pipe flow fosters head cut migration due to gully bank failure. The objective was to determine the effect of subsurface pipe flow above a water-restricting horizon on ephemeral gully formation during rainfall events and specifically to quantify the effects of hydraulic head on ephemeral gully erosion. A rainfall simulator applied rainfall at 65 mm/h to a 1.5 m long by 1 m wide soil bed at a 5% slope. Rainfall was applied for 1 hour under dry antecedent conditions, followed 30 minutes later by a 30 minute rainfall under wet conditions, then 30 minutes later a final 30 minute rainfall under very wet conditions. The soil profile consisted of 30 cm of Providence silt loam soil packed to a bulk density of 1.35 g cm-3 over a 5 cm thick water restricting layer packed to 1.57 g cm-3. Pipe flow was simulated using a 2 cm diameter porous pipe that extended 50 cm into the soil bed from the upper end. Pipe flow was controlled under a constant head of 0 (no pipe flow), 15, and 30 cm. Tensiometers with pressure transducers were inserted into the soil bed at 12 positions to monitor soil water pressure dynamics during flow events. Tension cracks were often observed to precede episodic mass wasting events as a result of pipe flow. Surface runoff initiated the development of rills at the open face that propagated in distance and depth with time. However, as with pipe flow, gully development was accelerated by mass wasting events.