The spectacular incised valleys of the Blue Mountains Plateau in the west and south-west of the Permo-Triassic Sydney Basin are the focus of this paper. The evolution of these valleys has been shown to be controlled by knickpoint retreat following uplift along the Lapstone Structural Complex. However, very little investigation has been conducted into the processes which dominate after the knickpoint has past, in particular those processes which facilitate valley widening. Investigations in the incised Nattai River valley, a tributary of the Wollondilly River in the south-west of the Basin, found hillslopes which are characterized by mass movement, particularly rock fall, debris flows, rotational slumping and large landslides. To determine the relative importance of mass movement in denudation, we compared modern rates of sediment yield from hillslope plots and suspended load in the Nattai catchment with long term rates of sediment yield and denudation calculated from incision below Tertiary basalts, cosmogenics and apatite fission track ages determined for the Blue Mountains Plateau. The comparison revealed that the average modern background denudation rate is an order of magnitude less than the long term average, which implies a very low sediment yield for the majority of the time and compares well with field observations. The background rates are episodically punctuated by short term sediment yield events which are at least an order of magnitude higher than the long term average and higher than erosion rates measured following the 2001/02 bushfires. We suggest that following knickpoint retreat, the primary process of denudation in the Nattai valley is extreme erosion events on hillslopes which facilitates valley side-wall retreat. Sediment generated through mass movement directly enters the stream network or is stored on the lower slopes and valley floor to be progressively reworked by floods capable of remobilizing sand to boulder sized material. The mass movement events appear to be linked to lithology which suggests that mass movement and side-wall retreat is an important geomorphic process in the evolution of the incised valleys of the Blue Mountains Plateau.