<p>Hydropower serves as a crucial source of electricity in Tanzania; however, its long-term sustainability is threatened by climate variability, sedimentation, aging infrastructure, and investment risks associated with Independent Power Producers. This review evaluates the integration of climate resilience in hydropower planning and its significance in regional energy cooperation. A systematic review adhering to PRISMA 2020 guidelines was performed, utilizing both global and local sources. The findings suggest that decreasing rainfall and persistent droughts affect reservoir inflows, which leads to unstable production of electricity, while methane emissions from reservoirs negatively impact the climate advantages of hydropower. Financing is constrained by regulatory deficiencies and elevated risks, which diminishes private investment in small-scale hydropower projects in rural regions. Regional collaboration via the East African Power Pool presents opportunities for supply stabilization and trade expansion; however, limited transmission infrastructure and inconsistent regulations impede advancement. Recommendations involve the implementation of climate-conscious planning, hydrological modeling, and enhanced management of sediment and methane. Enhancing Tanzania’s energy security and reliability can be achieved through the expansion of decentralized systems, the strengthening of interconnections, and the harmonization of regional policies.</p>