The industrial development and growing population in India is in demand of more energy. Coal based thermal power generation is a major source of energy and is expanding at a very high rate leading to over exploitation of coal reserves, which is causing adverse impacts on the environment. Remote sensing and GIS techniques have been found to be useful in mapping and monitoring of dynamic changes taking place due to mining activity. Satellite based environmental impact assessment involves various aspects, such as land use, water resources, land degradation etc. These studies help in formulating environmental management plan for the mining sector. Coal mines in Erai watershed of Chandrapur district so far have lost 2139.68 hectares of land constituting a fertile agricultural land, reserve forest, protected forest and natural river course of Erai river, Upsa nala and Motaghat nala severely affecting the watershed eco-system. Therefore, an in-depth impact assessment study of coal mines in Erai watershed of Chandrapur district was carried out using geoinformatics and the results are presented in this paper.