Nutrient loading from the Maumee River watershed is a significant reason for the harmful algal blooms (HABs) problem in Lake Erie. Strategies to reduce nutrient loading from agricultural areas in the Maumee River watershed need to be explored. Best management practices (BMPs) are popular approaches for improving hydrology and water quality. Various scenarios of BMP implementation were simulated in the AXL watershed (an agricultural watershed in Maumee River watershed) using Soil and Water Assessment Tool (SWAT) and a new BMP cost tool to explore the cost-effectiveness of the practices. BMPs of interest included vegetative filter strips, grassed waterways, blind inlets, grade stabilization structures, wetlands, no-till, nutrient management, residue management, and cover crops. The following environmental concerns were considered: streamflow, Total Phosphorous (TP), Dissolved Reactive Phosphorus (DRP), Total Kjeldahl Nitrogen (TKN), and Nitrate+Nitrite (NOx). To obtain maximum hydrological and water quality benefits with minimum cost, an optimization tool was developed to optimally select and place BMPs by connecting SWAT, the BMP cost tool, and optimization algorithms. The optimization tool was then applied in AXL watershed to explore various scenarios. The optimization tool and BMP optimization results can be used by watershed groups and communities to solve hydrology and water quality problems.