Create a polygon using elevation as a limiting factor for one side

I'm a graduate student who is somewhat new to GIS and I expect that the solution to this problem is probably pretty easy.

I have a satellite image of an island as well as a DEM. All I need to do is create a polygon that illustrates a "control" area. The area is alongside a steep slope, and I would like to use a certain elevation along that slope as one of the sides of the polygon. Any help appreciated.

Thanks

Brian