River systems regulated by dams severely influence habitat suitability of aquatic and riparian species and ecosystem services. Research into the effect of dam operations on ecology and assessing possibilities to improve habitat suitability for specific key-species is therefore vital to increase the ecological functioning of dammed rivers. In this study, the habitat suitability for Plecoglossus altivelis (Ayu) downstream of the Funagira dam in the Tenryuu River, Japan, was assessed under several reservoir operation scenarios. A hydro-morphodynamic model and a water quality model were developed for the reservoir and the downstream reach. The output of these models was used to simulate the habitat suitability of several life history events of P. altivelis. The habitat simulation incorporated response curves for water depth, flow velocity, suspended sediment, dissolved oxygen and temperature. Several hydrological years were modeled to investigate two life-cycles of P. altivelis to assess changes in habitat suitability. The model results reveal that decreasing the reservoir water levels can increase habitat suitability and sediment flushing, whilst maintaining power generation goals. This is due to changes in sediment load and dam outflow altering erosion and sedimentation patterns that build more suitable habitat for P. altivelis. This research can contribute to a more sustainable river system where ecological values are considered within the socio-economic setting of dammed rivers.