The Murray–Darling river basin (MDRB) occupies 14% of the Australian land mass and it is the longest and the most iconic river system in Australia. From 2001 to 2009, MDRB experienced a severe rainfall deficiency that gave rise to the millennium drought. This drought aggravated the water scarcity in South Australia, especially in the Adelaide area. At the end of MDRB, the Murray River flows into the Lower Lakes (Lake Alexandrina and Lake Albert) before entering the ocean. This study proposes a second-generation coastal reservoir strategy in Lake Alexandrina to provide freshwater for the city of Adelaide. Hydraulic, hydrodynamic and salinity processes in the lake were modelled using MIKE modelling suite to simulate the impact of a coastal reservoir. The results show that if a coastal reservoir is built, it could provide an additional 150 GL/year of freshwater for Adelaide. The salinity in the coastal reservoir can be kept at around 0.3 PSU.