A general algorithm developed for stochastic optimization of multireservoir systems is used to determine optimal operational policies for five of the major reservoirs of the Parambikulam-Aliyar irrigation and power project in India. A closed-loop suboptimal policy was determined for the stochastic inflow, deterministic demand problem, subject to storage and cumulative release constraints imposed by an interstate water-sharing agreement. The closed-loop policies were further used to determine optimal rule curves for the major reservoirs. A comparison of the simulated optimal policies and the past performance of the project demonstrates the utility of the derived policies determined with the proposed algorithm. ¿ American Geophysical Union 1996