Sea level rise (SLR) and subsidence are expected to increase the risk of flooding and reliance on flood defenses for cities built on deltas. Here, we combine reliability analysis with hydrodynamic modeling to quantify the effect of projected relative SLR on dike failures and flood hazards for Shanghai, one of the most exposed delta cities. We find that flood inundation is likely to occur in low‐lying and poorly protected periurban/rural areas of the city even under the present‐day sea level. However, without adaptation measures, the risk increases by a factor of 3–160 across the densely populated floodplain under projected SLR to 2100. Impacts of frequent flood events are predicted to be more affected by SLR than those with longer return periods. Our results imply that including reliability‐based dike failures in flood simulations enables more credible flood risk assessment for global delta cities where conventional methods have assumed either overtopping only or complete failure.