Although hydropower is a source of low-carbon energy, without careful consideration and management, dams have the potential to degrade river ecosystems and the goods and services they provide to society. Today, a broad range of hydropower interests and stakeholders are seeking approaches to hydropower development and operation that are more environmentally and socially sustainable. The Penobscot River Restoration Project (‘the Project’) illustrates that basin-scale approaches can provide a broader set of solutions for balancing energy and riverine environmental resources than can be achieved at the scale of individual projects. The Penobscot basin is the largest in Maine and historically supported culturally and economically significant populations of migratory fish. These migratory fish populations declined dramatically following the construction of a series of hydropower dams on the main stem river and major tributaries in the early 20th century. The Project, negotiated between a power company (PPL Corporation) and a coalition including the Penobscot Indian Nation, resource agencies, and nongovernmental conservation organizations, features the removal of two main stem dams on the lower Penobscot and improved fish passage at the dams that remain. Because of various capacity and/or operational changes, power production will be increased at the remaining dams and total hydropower energy production from the basin will be maintained or increase slightly. The Project is expected to expand considerably the proportion of the basin accessible to migratory fish and contribute to significant increases in fish populations. The Project illustrates that a basin-scale approach can potentially yield more comprehensive solutions for sustainable hydropower than can be achieved at the project scale, and we recommend that such large-scale planning processes can improve the sustainability of both regulatory licensing of existing dams as well as the planning of future dams in regions undergoing the expansion of water-management infrastructure.