Urban water systems are being stressed due to the effects of urbanization and climate change. Although household rainwater tanks are primarily used for water supply purposes, they also have the potential to provide flood benefits. However, this potential is limited for critical storms, as they become ineffective once their capacity is exceeded. This limitation can be overcome by controlling tanks as systems during rainfall events, as this can offset the timing of outflow peaks from different tanks. In this paper, the effectiveness of such systems is tested for two tank sizes under a wide range of design rainfall conditions for three Australian cities with different climates. Results show that a generic relationship exists between the ratio of tank:runoff volume and percentage peak flow reduction, irrespective of location and storm characteristics. Smart tank systems are able to reduce peak system outflows by between 35% and 85% for corresponding ranges in tank:runoff volumes of 0.15–0.8. This corresponds to a relative performance improvement on the order of 35% to 50% compared with smart tanks that are not operated in real-time. These results highlight the potential for using household rainwater tanks for mitigating urban flooding, even for extreme events.