Dam management often involves tradeoffs among hydropower generation capacity, environmental impacts, and project costs. However, our understandings of such tradeoffs under a full range of dam management options remain limited, which hinders our ability to make sound and scientifically defensible dam management decisions. In order to assess the scope for theoretical tradeoffs, a dynamic model of hydropower production, important fish populations, and project costs was developed using the system dynamics modeling technique. Three dam management options investigated the likely outcomes from: dam removal, fishway installation (e.g., pool-and-weir, Denil, and fish lift), and no action. The model was applied to the Penobscot River located in Maine, United States as a proof of concept, where recent actions (i.e., dam removal and fishway construction) have been undertaken. We modeled theoretical influence of these actions on four significant sea-run fish (alewife Alosa pseudoharengus, American shad Alosa sapidissima, Atlantic salmon Salmo salar, and sea lamprey Petromyzon marinus) by developing an index of spawner population potential based on population models for each species. Optimal dam management solutions may maximize spawner population potential and energy production to 60-62% of maximum achievable values while limiting the project cost to US$17 million (44% of the maximum value). Our results demonstrate that basin-scale management strategies may increase the migratory fish restoration while preserving hydropower generation capacity. Diversification of management options (e.g., combination of fishway installations, dam removals, and generation capacity) may increase the efficacy of strategic fish-energy-cost tradeoffs.