Environmental flow releases from hydropower dams have gained worldwide attention in recent years as a tool for improving hydrological conditions and reversing adverse ecological and socio-economic changes associated with regulated rivers. Few studies have focused on the potential for implementing downstream environmental flows within the constraints of existing infrastructure and hydropower production commitments. A simulation model, using a 97-year historical flow series, was developed to assess the trade-offs between environmental flow scenarios and hydropower generation in the Lower Zambezi Basin, Mozambique – a river–floodplain system of immense biodiversity and socio-economic value. Water availability for generating environmental flow releases from the Cahora Bassa Dam to improve downstream hydrological conditions is constrained by water demand for guaranteed energy supply to electricity users (‘firm power’). Recreating the natural flood hydrograph for the Lower Zambezi River by mimicking unregulated mean monthly flows is not possible without substantial reductions in the firm power reliability and total power production. However, a variety of options are available for generating high-volume flood pulses during the normal flood season months of December to March. For example, a mean monthly outflow of 5000 m3 s−1 in December was generated in 93.4% of all years within industry-acceptable thresholds for the firm power reliability and with <3% reduction in power generation. Under baseline conditions, these same outflows would occur in only 18.7% of all years. Improved firm power reliability and energy generation for a given environmental flow scenario are attainable by establishing minimum reservoir elevation thresholds that curtail environmental flow releases during drought periods. Outflows of 5000–8000 m3 s−1 in February were realized within acceptable firm power levels, for example, using a reservoir elevation threshold of 316 m. Increasing the outflow capacity at the Cahora Bassa Dam to enable reservoir management as a run-of-river scheme during flooding events could also substantially improve downstream flow patterns and hydropower output.