Digital elevation models (DEMs) are widely used to define the flow direction in distributed hydrological models for simulation of streamflow. In recent decades, numerous methods for flow direction determination have been applied successfully to mountainous regions. Nevertheless, some problems still exist when those methods are used for flat or gently sloped areas. The present study reviews the conventional methods of determining flow direction for such landscapes and analyzes the problems of these methods. Two different methods of determining flow direction are discussed and were applied to the Xitiaoxi Catchment, located in the Taihu Basin in south China, which has both mountainous and flat terrain. Both the agree method and the shortest path method use drainage networks derived from a remote sensing image to determine the correct location of the stream. The results indicate that the agree method provides a better fit with the DEM for the hilly region than the shortest path method. For the flat region where the flow has been diverted and rerouted by land managers, both methods require observation of the drainage network to determine the flow direction. In order to clarify the applicability of the two methods, both are employed in catchment hydrological models conceptually based on the Xinanjiang model and implemented with PCRaster. The simulation results show that both methods can be successfully applied in hydrological modeling. There are no evident differences in the modeled discharge when using the two methods at different spatial scales.