Digital elevation models (DEMs) represent the topography that drives surface flow and are arguably one of the more important data sources for deriving variables used by numerous hydrologic models. A considerable amount of research has been conducted to address uncertainty associated with error in digital elevation models (DEMs) and the propagation of error to derived terrain parameters. This review brings together a discussion of research in fundamental topical areas related to DEM uncertainty that affect the use of DEMs for hydrologic applications. These areas include: (a) DEM error; (b) topographic parameters frequently derived from DEMs and the associated algorithms used to derive these parameters; (c) the influence of DEM scale as imposed by grid cell resolution; (d) DEM interpolation; and (e) terrain surface modification used to generate hydrologically-viable DEM surfaces. Each of these topical areas contributes to DEM uncertainty and may potentially influence results of distributed parameter hydrologic models that rely on DEMs for the derivation of input parameters. The current state of research on methods developed to quantify DEM uncertainty is reviewed. Based on this review, implications of DEM uncertainty and suggestions for the GIS research and user communities are offered.