Soil erosion poses a significant threat to agricultural production worldwide, with a still-debated impact on the current increase in atmospheric CO2. Whether erosion acts as a net carbon (C) source or sink also depends on how it influences greenhouse gas (GHG) emissions via its impact on crop yield and nutrient loss. These effects on the environmental impacts of crops remain to be considered. To fill this gap, we combined watershed-scale erosion modeling with life cycle assessment to evaluate the influence of soil erosion on environmental impacts of wheat production in the Ebro River basin in Spain. This study is the very first to address the full GHG balance of erosion including its impact on soil fertility and its feedback on crop yields. Two scenarios were simulated from 1860 to 2005: an eroded basin involving conventional agricultural practices, and a non-eroded basin involving conservation practices such as no-till. Life cycle assessment followed a cradle-to-farm-gate approach with a focus on recent decades (1985–2005). The mean simulated soil erosion of the eroded basin was 2.6 t ha−1 year−1 compared to the non-eroded basin. Simulated soils in both eroded and non-eroded basins lost organic C over time, with the former emitting an additional 55 kg CO2 ha−1 year−1. This net C source represented only 3% of the overall life cycle GHG emissions of wheat grain, while the emissions related to the increase of fertilizer inputs to compensate for N and P losses contributed a similar percentage. Wheat yield was the most influential parameter, being up to 61% higher when implementing conservation practices. Even at the basin scale, erosion did not emerge as a net C sink and increased GHG emissions of wheat by 7–70%. Nonetheless, controlling erosion through soil conservation practices is strongly recommended to preserve soils, increase crop yields, and mitigate GHG emissions.