A six-stage operation policy for routing of flood hydrographs of return periods from 1.01 year up to the Probable Maximum Flood (PMF) for any dam having a gated spillway is proposed. The gate opening rules are determined depending on the recent pool level. Regardless of the size and timing of any incoming floods, the fixed rules of the six-stage operation policy will provide optimum routing for all, which are classified into six different groups based on their return periods. 10-, 100-, 1000-, 10 000- 100 000-year floods, and PMF are the upper limits for the six groups. Next, an Incremental Dynamic Programming programme is developed to optimize both the firm and secondary energies of hydroelectric generation at monthly periods. First, the six-stage flood routing programme is applied sequentially to three dams, all on the Seyhan River in Turkey, for 18 combinations resulting from different active storages, and optimum flood operation policies for all three dams for all Is combinations are determined. Second, the Dynamic Programming programme is applied to these three darns, and optimum hydroelectricity generation policies for an 18 combinations are computed. Finally, the optimum active and flood retention storages for the three darns are determined so as to maximize the net probability-weighted present worth of hydroelectricity benefits minus flood damage costs.