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Globally, water and energy demands are increasing continuously, while the storage capacity of structures like dams and reservoirs is reducing due to sediment-induced problems. Study of the reservoir sedimentation is essential for restoring the storage capacities to ensure the increasing water and energy demands. This study suggested the methodology for preparing the revised elevation–area–capacity curve for a reservoir for its efficient use. Also, it focused on two important issues through an example—estimation of the loss of the live storage capacity of the reservoir due to sedimentation and remedial measures to regain the lost capacity. In the present study, reservoir sedimentation is estimated using satellite remote sensing technique (SRS) considering a case of the Ujjani reservoir located in Maharashtra State, India. The modified normalized difference water index (MNDWI) is employed to determine the water surface area using ERDAS Imagine software. The loss in live capacity because of deposition of sedimentation over 41 years is determined and estimated to be 174.592 Mm3 showing the rate of capacity loss as 4.26 Mm3/year, which is 11.23% loss of the original capacity under study zone. To regain the storage capacity of the reservoir, it is proposed to adopt manual and or mechanical dredging with flushing for desilting the deposited sediment in the reservoir.