The lower Apalachicola–Chattahoochee–Flint River Basin in the Southeast United States represents a major agricultural area underlain by the highly productive karstic Upper Floridan aquifer (UFA). During El Niño Southern Oscillation-induced droughts, intense groundwater withdrawal for irrigation lowers streamflow in the Flint River due to its hydraulic connectivity with the UFA and threatens the habitat of the federally listed and endangered aquatic biota. This study assessed the compounding hydrologic effects of increased irrigation pumping during drought years (2010–2012) on stream–aquifer water exchange (stream–aquifer flux) between the Flint River and UFA using the United States Geological Survey modular finite element groundwater flow model. Principal component and K-means clustering analyses were used to identify critical stream reaches and tributaries that are adversely affected by irrigation pumping. Additionally, the effectiveness of possible water restriction scenarios on stream–aquifer flux was also analysed. Moreover, a cost–benefit analysis of acreage buyout procedure was conducted for various water restriction scenarios. Results indicate that increased groundwater withdrawal in Water Year 2011 decreased baseflow in the lower Apalachicola–Chattahoochee–Flint River Basin, particularly, in Spring Creek, where irrigation pumping during April, June, and July changed the creek condition from a gaining to losing stream. Results from sensitivity analysis and simulated water restrictions suggest that reducing pumping in selected sensitive areas is more effective in streamflow recovery (approximately 78%) than is reducing irrigation intensity by a prescribed percentage of current pumping rates, such as 15% or 30%, throughout the basin. Moreover, analysis of acreage buyout indicates that restrictions on irrigation withdrawal can have significant impacts on stream–aquifer flux in the Basin, especially in critical watersheds such as Spring and Ichawaynochaway Creeks. The proposed procedure for ranking of stream reaches (sensitivity analysis) in this study can be replicated in other study areas/models. This study provides useful information to policymakers for devising alternate irrigation water withdrawal policies during droughts for maintaining flow levels in the study area. Copyright © 2017 John Wiley & Sons, Ltd.