Urbanization is a global phenomenon which has provoked severe disruptions in hydrological cycles, resulting in flooding problems. While detailed studies exist for the world’s temperate zones, they are few for tropical zones where most of future urbanization may occur and where flooding is already a problem. A tropical watershed in Costa Rica was used to analyze the urban development and the associated hydrological response between 1945 and 2019, based on remotely sensed data and a numerical model. Using a detailed spatial-temporal approach, we found that the watershed’s overall urbanization over the timespan (+64%-points urban-areas) had led to major hydrological challenges (+80% runoff-volume, +220% peak-flow-rate and maximum-specific-discharge, and −25 min time-to-peak). These challenges were then placed in the context of historically reported flood events, providing a basis for spatially-differentiated flood mitigation actions and for guiding future urbanization. The study also provides valuable insights for other tropical regions with the same situation.