Environment management is one of the key aspects of hydropower development in acquiring sustainable energy. However, there has been limited research demonstrating the overall aspects of environment management of hydropower development with support of sound empirical evidence. In present study, the status of environment management in hydropower development was comprehensively investigated by conducting a case study based on the data collected from a field survey. The results show that, as environment management is largely subject to legal requirements, the environment management system needs to be established by integrating the legal requirements and needs of project implementation. This could potentially reduce the influence of legal restrictions on hydropower development. The main hydropower project environment management processes include identifying key environmental factors, implementation, monitoring, and performance measurement, which deal with environmental issues such as terrestrial and aquatic ecology protection, wastewater treatment, solid waste disposal, and acoustic-environment protection. Project participants should establish partnering relationships to cooperatively deal with environmental impacts of hydropower project development, in which public participation and sufficient resources input into environmental protection are essential for project success. The results of this study provide a sound basis for participants to deal with the key issues of environmental protection such as meeting legal requirements, training for improving environment management process, cost control, and cooperative environment management. The results of this study could help practitioners to tackle the interactions among project delivery, environmental protection, and engagement of local communities in an optimized way with the aim of maximizing effectiveness of the resources of all participants.