Dam breaches have catastrophic consequences, causing severe property damage, life loss, and environmental impact. The potential dam breach downstream flooding of the Kulekhani reservoir, Nepal, was studied using a 2D Diffusion Wave Equation (DWE) and Full Dynamic Wave Equation (FDWE) through an open-source solver, Hydrologic Engineering Center-River Analysis System (HEC-RAS). The suitable dam breach model was identified based on the dam geometry and sixteen historical dam failure cases. The simulated downstream peak was tested with an empirical relation, considering reservoir volume and duration of failure. Model comparisons through the flood plain mapping of water depth, flow velocity, flood intensity as per guidelines of the American Society of Civil Engineers (ASCE), and arrival time were carried out for flood hazard assessment. FDWE was able to capture the physical flow phenomena in the river bend resulting in higher flow velocity at the outer bend, lower velocity at the inner bend, and formation of eddies due to the application of the turbulence model, considering possible momentum losses, whereas DWE was unable to capture these effects due to a simplified momentum equation. The total area of flood extension was found to be increased by 30% using FDWE than the DWE due to higher water surface elevation. Most of the towns along the Kulekhani River were classified as “Very High” intensity flood regions according to ASCE, due to the V-shape valley. The peak time difference at the Bagmati River confluence was evaluated between the models. This plays an important role in decision-making for the selection of the flood model to make a safe evacuation plan. The application of FDWE was found to be suitable for the rapidly varying unsteady flow in the steep meandering river.