Processes contributing to development of ephemeral gully channels are of great importance to landscapes worldwide, and particularly in dryland regions where soil loss and land degradation from gully erosion pose long-term land-management problems. Whereas gully formation has been relatively well studied, much less is known of the processes that anneal gullies and impede their growth. This study of gully annealing by aeolian sediment, spanning 95 km along the Colorado River corridor in Glen, Marble, and Grand Canyon, Arizona, USA, employed field and remote sensing observations, including digital topographic modelling. Results indicate that aeolian sediment activity can be locally effective at counteracting gully erosion. Gullies are less prevalent in areas where surficial sediment undergoes active aeolian transport, and have a greater tendency to terminate in active aeolian sand. Although not common, examples exist in the record of historical imagery of gullies that underwent infilling by aeolian sediment in past decades and evidently were effectively annealed. We thus provide new evidence for a potentially important interaction of aeolian–hillslope–fluvial processes, which could affect dryland regions substantially in ways not widely recognized. Moreover, because the biologic soil crust plays an important role in determining aeolian sand activity, and so in turn the extent of gully development, this study highlights a critical role of geomorphic–ecologic interactions in determining arid-landscape evolution.