Reservoirs in Taiwan often provide hydroelectric power, irrigation water, municipal water, and flood control for the whole year. Taiwan has the climatic characteristics of concentrated rainy seasons, instantaneous heavy rains due to typhoons and rainy seasons. In addition, steep rivers in mountainous areas flow fast and furiously. Under such circumstances, reservoirs have to face sudden heavy rainfall and surges in water levels within a short period of time, which often causes the water level to continue to rise to the full level even though hydroelectric units are operating at full capacity, and as reservoirs can only drain the flood water, this results in the waste of hydropower resources. In recent years, the impact of climate change has caused extreme weather events to occur more frequently, increasing the need for flood control, and the reservoir operation has faced severe challenges in order to fulfil its multipurpose requirements. Therefore, in order to avoid the waste of hydropower resources and improve the effectiveness of the reservoir operation, this paper proposes a real-time 48-h ahead water level forecasting system, based on fuzzy neural networks with multi-stage architecture. The proposed multi-stage architecture provides reservoir inflow estimation, 48-h ahead reservoir inflow forecasting, and 48-h ahead water level forecasting. The proposed method has been implemented at the Techi hydropower plant in Taiwan. Experimental results show that the proposed method can effectively increase energy efficiency and allow the reservoir water resources to be fully utilized. In addition, the proposed method can improve the effectiveness of the hydropower plant, especially when rain is heavy.