Instream Flow Incremental Methodology (IFIM) has been developed to assist decision-making in river system planning, protection and management. The methodology consists of a series of hydraulics, water quality, hydrology and ecology models as well as various methods for simulating quantitative relationships between the discharge and habitat availability. This method provides not only a scientific basis for rational allocation of water resources but also an effective means for evaluating programs of river ecological restoration. While the method has been utilized widely overseas, its application in China has not been reported. This paper introduces the method in detail and illustrates its application based on an example. Finally the paper discusses the prospect of the method’s application in China and problems that may need to be addressed.