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Floods are among the most devastating and financially burdensome natural disasters in Europe. The combined impact of climate change and land use change is expected to exacerbate and intensify the destructive consequences of river floods. In this study, we analysed the effects of wetland restoration on peak and base flows and on water quality in the Kylldal catchment of the Kyll River in the German Middle Mountains using the Soil and Water Assessment Tool+ (SWAT+). Monthly median daily discharge increases varied between 3% and 33% in the studied (micro)catchments. The higher median flow rates show that discharge peaks were attenuated and distributed over a longer period, making both extreme peak flows and low flows less common. Peak flows tended to decrease, with the largest effects between late fall and early spring when peak flow values decreased by up to 18%. The annual maximum peak flows in each of the three micro-catchments decreased by 12–24% on average. The occurrence of daily average flow rates larger than 1 m3 s−1 was up to 45% lower after wetland restoration. Low flows increased by up to 21% and 13% in the summer and fall, respectively, which suggests that drought risk also decreases after wetland restoration. Average nitrogen exports decreased by 38–50% in the project areas and by 20% at the catchment level. Average phosphorus exports decreased by 52–67% in the project areas and by 25% at the catchment level. The study highlights the potential of wetland restoration for improving hydrological services, mitigating flood risks, and enhancing water quality. Restoring and maintaining freshwater ecosystems and their natural sponge functions is crucial for effectively managing water resources and addressing the challenges posed by climate change and land use changes. [ABSTRACT FROM AUTHOR]