Urbanization is known to increase the volume of stormwater runoff and peak flow rates, which leads to changes in the natural flow regime and increases the likelihood of flooding. Low-impact development (LID) practices seek to reduce runoff volume and peak flow and are generally considered to be a more sustainable solution for urban stormwater management. In this study, we present a systematic approach to address nuisance flooding issues in small cities and communities. As an application, the effectiveness of two LID practices, rain barrels and permeable pavements, were explored in mitigating the urban flooding problem of a highly urbanized small coastal watershed in Alabama, USA. The EPA Stormwater Management Model (SWMM) was first calibrated for water depth using data collected at multiple sites within the watershed during the 2014–2015 period. The calibrated model was then used to first identify the areas prone to flooding using design storms with 1, 2, 5-, 10-, 50-, and 100-year return periods. Floodplain maps were generated for those design storms with HEC-RAS. Next, LID options upstream of those flood-prone areas were assessed to potentially minimize the flooding risks. The results indicate that LID controls can have considerable benefits for stormwater management by reducing runoff volume (1–24%), peak flow rates (18–25%), and water depth (5–15%), potentially returning watersheds to their natural flow regimes, thereby minimizing the flooding risk in urbanized areas. However, the effectiveness of LIDs, especially for the runoff volume, quickly diminishes as the return periods of the storms increase. Rain barrels were identified as the most economical and effective LID within the drainage system.