The operation of flood retarding areas does not attract much attention, although they are important components of flood control systems. Poor operation of such areas restricts not only the socio-economic development of the flood retarding area, but also limits scientific flood control options. As the second-largest flood retarding area in China, with more than 2000 km² and 300 polders, the Hongze Lake vicinity was taken as a case study of graded flood retarding. A one and two-dimensional coupled hydrodynamic model was established to simulate flood routing in the Hongze Lake area. Fifteen different schemes involving different flood magnitudes and flood retarding operations were simulated. The results show that (1) having a flood retarding area is essential; and (2) the “graded flood retarding” scheme is superior to “no grading flood retarding” scheme; and (3) a “two-grade flood retarding” scheme is recommended.