The dual benefits of urban rainwater harvesting include supplementing municipal water supply and the potential to improve urban stream hydrology by capturing, consuming and effectively removing excess urban runoff. Rainwater tanks (RWTs) can be designed to also achieve additional benefits by enabling a controlled release of surplus water, as environmental flow, to restore baseflow in urban streams. This paper examines the implications of environmental flows on water supply reliability and streamflow hydrology through simulating the operation of dual-duty RWTs hypothetically located in Australian capital cities. It was found that in some cases water supply reliability dropped by a marginal 2% while the environmental benefits increased by 30%. On average, environmental flows enabled a 90% restoration of desirable streamflow, measured by a simplified version of the environmental benefit index. It was also found that performance varied notably between Australian cities, due to the seasonality of rainfall.