Operations of Philpott dam for flood control and peak power generation since 1953 have substantially altered downstream ecosystem conditions in the Smith River from the dam to Martinsville. We have described in intensive detail aspects of habitat and fish populations in the tailwater over the past four years (2000 to 2004), analyzed the limited historical information available to develop a better understanding of the mechanisms behind observed changes in the tailwater, and recommend appropriate actions to improve depressed fish populations and environmental conditions. Our research emphasizes that there are no “silver bullet” solutions and the most successful path toward improving the tailwater will reflect numerous tradeoffs to balance environmental, economic, and recreational goals. However, it is clear that enhancing conditions in the Smith River hinge on mitigating the effects of fluctuating releases from Philpott Dam through a combination of flow management (e.g. characteristics of dam operations during baseflow and peak flow periods) and habitat improvement (e.g. channel restoration, temperature management, enhanced biological productivity). In addition, removal or modification of Martinsville Dam to enhance flow, habitat, and fish and sediment passage would benefit fish populations and environmental conditions in the lower tailwater. Current fishery management strategies which are ineffective for enhancing brown trout should be re-evaluated after habitat and flow changes are instituted. Management actions for improving flow and habitat also should be assessed in light of the presence of the Federally Endangered Roanoke logperch Percina rex that also appear to be limited by degraded environmental conditions in the tailwater.