Wetlands play a significant role in preventing floods and providing access to nature in urban contexts, among many other benefits. However, in southern Chile, they have been severely threatened by an urban growth paradigm that has traditionally overlooked the valuable ecosystem services they provide. This has led to frequent flooding, water quality issues, and biodiversity loss in several urban areas within the region. Llanquihue, a small city in Los Lagos district with a rich wetland system, is no exception to these problems. The approach proposed by Patagua et al. (Ciudades Sensibles al Agua: Guía de Drenaje Urbano Sostenible para la Macrozona Sur de Chile [Water sensitive cities: a guide to sustainable urban drainage for the Southern Macrozone of Chile]. https://www.ciudades-sensibles-al-agua.cl/, 2021) is applied to Llanquihue as a case study to understand the wetlands’ current behavior within the urban drainage system and to explore possibilities in terms of water-sensitive urban design. To simulate the flooding patterns and the spatial dynamics of surface/subsurface flux exchanges, a coupled model was adopted. Results suggest that continuous and integrated surface-subsurface simulations might be a key tool for urban stormwater planning in cities characterized by its strong interaction with a shallow water table. Based on these model results, one Llanquihue’s critical flooding areas is further analyzed and green infrastructure solutions are explored, showing great potential to mitigate flooding. Therefore, from a water-sensitive urban design perspective, it is suggested that stormwater management in Llanquihue should focus on preserving and restoring natural wetlands, as well as on developing additional green-blue infrastructure. This approach is meant to enhance current hydrological functions through a sustainable drainage system, increasing urban resilience within a global change context.