In the 1D–2D coupled simulation of urban waterlogging, the calculation process of vertical flow exchange is independent from the 1D hydraulic calculation, resulting in a failure to consider the node head and pipe flow during the exchange flow calculation, which may lead to irrational results and further affect the stability of the model calculation. However, setting an upper limit for the exchange flow may introduce excessive subjective factors into the simulation process. In this study, a vertical flow exchange method based on the water balance of nodes is proposed. When a node is in an overloaded state, the calculation of vertical flow exchange at the node is integrated into the 1D hydraulic simulation process, thus taking into consideration the influence of the node head and pipe flow when calculating vertical flow exchange. Additionally, the iterative solution method used in the 1D hydraulic model ensures numerical harmony between the vertical flow exchange, node head and pipe flow, thus ensuring the stability of the coupled calculation. For the non-overloaded nodes, the calculation of the vertical flow exchange was conducted using a variable-head orifice discharge formula, enabling the consideration of changes in the surface water depth during the calculation of the node backflow. Using the InfoWorks ICM model as a benchmark, a comparative analysis of case simulation results demonstrated that the improved vertical flow exchange method was able to accurately and stably simulate the process of vertical flow exchange. When used with the improved vertical exchange method, the coupled model gave simulation results that closely matched those of the benchmark model.