A computational fluid dynamics (CFD) study of the impact characteristics and stagnation formation on a solid target surface by an abrasive waterjet at supersonic velocities is presented to understand the impact process. A CFD model is developed and verified by experimental water and particle velocities and then used to simulate the jet impact process. The trends of the stagnation formation and its effect on the jet flow with respect to the jetting and impacting parameters are amply discussed. It is found that stagnation formation at the impact site increases with an increase in the impact time, nozzle standoff distance and nozzle diameter, while the initial peak velocity at the nozzle exit has little effect on the size of the stagnation zone. It is shown that stagnation markedly changes the water and particle flow direction, so that the particle impact angle is varied and the jet impact area is enlarged. The jet structure may be classified to have a free jet flow region, a jet deflection region with a stagnation zone and a wall jet region. Furthermore, the stagnation affects significantly the waterjet and particle energy transferred to the target surface. The average particle velocity across the jet is reduced by approximately one third due to the damping effect of the stagnation under the conditions considered in this study.