Facilities that produce hydroelectricity by diversion of part of the river’s flow, which are often considered to have lower environmental impact than conventional hydropower dams, are being built in large numbers on river systems throughout the world, yet their cumulative impacts are not well understood. This study evaluated the hydrological effects of operation of a diversion hydropower facility on the Correntes River in Brazil (mean discharge 73m3s−1), which is potentially important because of the ecological implications for the floodplains of the Pantanal into which it flows. Many similar dams are built or proposed on rivers feeding the Pantanal. The 210-MW facility known as Ponte de Pedra diverts part of the river flow into a diversion channel in a nearly “run-of-river” design. The natural (reconstructed) and regulated (observed) flow regimes were characterized using Indicators of Hydrologic Alteration (IHA) and Flow Duration Curves (FDC). Seven parameters of IHA were significantly altered by the reservoir formation (magnitude of lowest monthly flow, minimum flows of 1, 3 and 7days, maximum flow of 90days and counts of high and low pulses). Among these, Principal Components Analysis identified the maximum flow of 90days and the count of high flow pulses as integrators of hydrological alterations. The FDC showed that the reservoir also changed the seasonal regime of the flows, with greater changes in the lowest flow season. The reduction of river–floodplain connectivity and loss of associated ecosystem services are the major downstream ecological implications of this altered flow regime. To maintain the seasonal flooding regime while meeting the requirements for hydroelectric production, proposed limits for flow regime alterations are up to ±18% in low flow, ±24% in the rising limb and ±22% in high flow and the falling limb, relative to the natural flow. Operational changes to maintain flows with these limits could easily be implemented because the hydrological alterations attributed to the reservoir and operations of its dam are modest compared to seasonal variation in river flow. Without attention to maintaining the natural flow regime, the cumulative effects of diversion hydropower dams like this one will significantly alter the ecohydrology of downstream rivers and floodplains.