The maximum exploitation scale and rate of hydropower is the important scientific issue to which the researchers and policy-makers always pay close attention. In this paper, on basis of various assurance levels for instream flow and in accordance with the internal relation between installed capacity of the hydropower and discharge (flow), the calculation method for the maximum exploitation scale and rate of hydropower is discussed and the empirical test was conducted by southwest China case, the results show that: (1) The calculation of exploitation scale and rate of hydropower according to instream flow as well as the equilibrium point between installed capacity of the hydropower and discharge is a effective attempt and new approach. (2) In southwest China, at the same assurance level for instream flow, the hydropower exploitation scale and rate significantly vary in major rivers. Generally, the exploitation scale is large for the river with large theoretical potentials while small for the river with small theoretical potentials; as for the exploitation rate, basically the rule is opposite. (3) The river with the maximum hydropower exploitation rate is high generally lies in the industrialized, urbanized, and densely populated regions where the sensitivity of river ecosystem is relatively low; the river with low hydropower exploitation rate generally lies in eco-sensitive areas which has a high requirement on assurance level for instream flow. (4) The maximum, moderate and excellent exploitation rates of hydropower are 16%, 12% and 8% (based on theoretical potentials); 22%, 17% and 11% (based on technologically exploitable hydropower potentials); and 34%, 25% and 17% (based on economically exploitable hydropower potentials) respectively in southwest China.