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Reservoir sedimentation management has become an important topic for large dams in the United States due to their historical design, current age, and increased environmental regulation. Less attention has been paid to small dams (hydraulic size < 0.01) in remote mountains with urgent sedimentation problems. In drier climates, such reservoirs may be frequently drained and trans-catchment flows routed over their sediment deposits heading from one mountain tunnel to another. This study asked an unexplored scientific question focusing on this special setting: how do different amounts of water transfers interact with different reservoir stages to affect sediment erosion and its redistribution in the backwater zone? Mindful timing and magnitude adjustment of water transfer, involving water diverted across watersheds by tunnels, through a reservoir were hypothesized to strategically redistribute sediment erosion for sites with water transfer/diversion facilities in the main channel. For a study site in the north-central Sierra Mountains of California, 2D hydrodynamic modeling revealed that sediment erosion within the backwater zone increased by > 100% when water transfer was maximized, involving a flow 12 times higher than mean annual discharge. With reservoir stage drawdown, the increment of sediment erosion was further increased by > 50% compared with water-transfer-only scenarios. The natural upstream inflow with daily flow occurrence of 5–25% was the optimal water transfer to avoid disturbing sediment. These results indicated that water transfer and stage drawdown optimization is a promising strategy to promote or abate redistribution of deposited sediment through a smaller reservoir.