Most of the water resources systems in India are operated with conventional approaches formulated several decades ago without much knowledge about the system behaviour. In the present study, the HEC-3 simulation model has been used to derive the operating policies for an interstate, multivalley-multireservoir system in India, to achieve optimal operational policies. Four different HEC-3 policies were analysed together with the standard operating policy. The results of the simulation runs were analysed and a suitable optimal operating policy for a multivalley-multireservoir system operation has been evolved. Trade-off analysis between the conflicting objectives of irrigation releases and hydropower production and the probability distribution for the annual average hydropower production were also arrived at to estimate the reliability of the system. © 1993, Taylor & Francis Group, LLC. All rights reserved.