This hydrological system model for Taihu Lake Drainage Basin consists of five submodels, namely: model for network channels and lakes, model for boundary conditions; model for rainfall and runoff;model for hydraulic projects and their management;model for unsteady flow in network channels. The model was calibrated and tested comprehensively using the observed data in 1984 and 1985. The results are consistent with those observed. The model has been applied for studying flood, drought and management of Taihu Lake Drainage Basin. As an example of applying,the influence of land reclamation from lake on flood damage.the flood damage reduction after all projects completed and the choice of design flood year were introduced briefly in this paper.