This study investigates the optimization of Pumped Storage Hydropower (PSH) integrated with Floating Photovoltaic (FPV) systems, with a focus on sustainable energy management. A nonlinear programming framework combined with scenario analysis was applied to a real hydropower system in Trentino, Italy. The optimization maximizes revenues through energy arbitrage while accounting for water resource and environmental objectives. Upgrading the traditional hydropower plant to PSH operation increases revenues by 4–8% over two hydrological years. Multi-objective optimization further reveals large gains in water availability, confirming PSH’s dual role as energy storage and water management infrastructure. Different FPV configurations analyzed show a 2–3% increase in photovoltaic energy yield due to the water-cooling effect, while the overall hybrid PSH–FPV integration mainly reduces grid dependency and pumping-related emissions, with near-complete decarbonization achievable under optimized scheduling. Overall, PSH provides the primary economic and operational advantage, while FPV strengthens sustainability, enabling resilient hydro–solar operation and contributing to renewable integration and decarbonization in future energy systems.