Parallel hydropower systems encounter a high risk of spillage in flood periods. Therefore, controlling spillage should be considered when hydropower systems increase power generation and satisfy power grid demand. To meet multiple operation targets, an effective operation method needs to precisely control reservoir level and quickly adjust power schedule based on real-time load changes. In this paper, an optimal operation method for parallel hydropower systems combining reservoir level control and power distribution is proposed. The method generates reservoir level control rules using a multi-objective simulation method for no gird demands operation, and obtain power distribution schedule considering spill risk and non-storage losses for gird demands. Taking a parallel system in southwest China as an example, the results show that the method can product annual power generation of 55.2 billion kWh, which has a 6.1% improvement compared to regular method. And it has the ability to precisely control daily water level and quickly adjust power distribution. It can be applied to parallel systems and has favorable results in power generation, peak shaving, and especially spillage reducing.