Abstract: Reservoir dam break flood are characterized by their sudden onset, intense destructive power, and wide impact range. Scientifically assessing their risks is therefore crucial for effective disaster prevention and mitigation in downstream regions. However, while existing 1D models cannot capture lateral flood dynamics, conventional 2D models lack sufficient computational efficiency to support real-time early warning applications. To address these challenges, this study develops an efficient and accurate flood simulation and damage assessment framework for downstream reservoir regions by integrating a GPU-accelerated 2D hydrodynamic model with progressive dam-break boundary conditions. Taking the Dagaotan Reservoir as a case study, a coupled evaluation model is constructed, consisting of an earth–rock dam failure model, a downstream hydrodynamic flood evolution model, and an economic loss assessment module. Based on the reservoir’s dam material properties, a gradual dam failure model is applied to compute the outflow hydrograph under different breach scenarios, which serves as the discharge boundary for the 2D hydrodynamic model. High-resolution DEM data are used to parameterize the computational grid, while land-use data inform the spatial distribution of roughness coefficients. Key flood risk indicators—inundation depth, extent, and duration—are simulated, and economic losses are estimated using GIS-based spatial overlay analysis. The results indicate that floodwaters initially spread to low-lying regions and accumulate, followed by expansion of the inundation area and water depth, eventually reaching a peak before gradually receding. The downstream flood evolution exhibits a pattern of severe upstream flooding with detention and attenuation effects in downstream areas. Peak water depths appear earlier and are higher at upstream points, while downstream peaks are delayed and lower. Under the three dam-break scenarios—partial breach under design flood level, partial breach under check flood level, and complete breach—both inundation depth and extent increase progressively. The expansion of high-depth zones contributes most to the total increase in inundated area. Economic loss is positively correlated with the severity of dam failure. The total breach scenario results in an estimated loss of 439 million yuan, substantially exceeding that of partial breach scenarios, with particularly severe impacts on residential and agricultural areas. This study provides a valuable reference for flood control, risk management, and emergency planning in the downstream area of the Dagaotan Reservoir, offering practical implications for real-world flood mitigation efforts.