Mangdechhu Hydroelectric Project (IC:720 MW) is a run-of-the-river type scheme, planned along the Mangdechhu in Bhutan. This paper aims at sharing the experience of deciding reservoir operation and sediment management for this project to achieve optimum benefits for which the project is planned and to ensure smooth running of plant. These guidelines are particularly important due to small reservoir, extremely steep river and sensitivity to change in inflow and/or reservoir levels, leading to highly turbulent flow conditions, having potential to damage the structure if not attended properly during reservoir operation. Hydraulic model study for spillway predicted tumultuous flow conditions upstream of spillway for high floods (more than 1200 m3/sec, 18% of Probable Maximum Flood (PMF)) in free flow situation. Due to these distinctive conditions, it is suggested to adopt sluicing (controlled gate operation) during high flood events, and to keep reservoir level higher than Minimum Drawdown Level (MDDL). For appropriate formation of jump in Ski Jump Bucket, it is proposed to evade free flow condition and adopt suitable arrangement of gates.