Due to extreme rainfall in 2010 in the Lusatian Neisse River catchment area (in Poland), a flood event with a return period of over 100 years occurred, leading to the failure of the Niedów dam. The earth-type dam constructed for cooling the Turów power plant was washed away, resulting in the rapid release of nearly 8.5 million m3 of water and the flooding of the downstream area with substantial material losses. Here we analyze the conditions and causes of the dam’s failure, with special attention given to the mechanism and dynamics of the compound breaching process, in which the dam’s upstream slope reinforcement played a specific and remarkable role. The paper also describes a numerical approach for simulating a combined flood event downstream from the dam with the use of a two-dimensional hydrodynamic model (MIKE21). Considering the specific local conditions, i.e., wide floodplain, meandering character of the main channel, embankment overtopping, and available data set, an iterative solution of the unsteady state problem is proposed. This approach enables realistic flood propagation estimates to be delivered, the dam breach outflow to be reconstructed, and several important answers concerning the consequences of the dam’s failure to be provided. Finally, the paper presents the reconstruction of the dam that is more resilient to extreme hydrological conditions under changing climate.