A transient numerical groundwater flow model using MODFLOW-NWT was set up and calibrated for Hanoi city, Vietnam, to understand the local groundwater flow system and to suggest solutions for sustainable water resource management. Urban development in Hanoi has caused a severe decline of groundwater levels. The present study evaluates the actual situation and investigates the suitability of managed aquifer recharge (MAR) to stop further depletion of groundwater resources. The results suggest that groundwater is being overexploited, as vast cones of depression exist in parts of the study area. Suitable locations to implement two MAR techniques—riverbank filtration and injection wells—were identified using multi-criteria decision analysis based on geographic information system (GIS). Three predictive scenarios were simulated. The relocation of pumping wells towards the Red River to induce riverbank filtration (first scenario) demonstrates that groundwater levels can be increased, especially in the depression cones. Groundwater levels can also be improved locally by the infiltration of surplus water into the upper aquifer (Holocene) via injection wells during the rainy season (second scenario), but this is not effective to raise the water table in the depression cones. Compared to the first scenario, the combination of riverbank filtration and injection wells (third scenario) shows a slightly raised overall water table. Groundwater flow modeling suggests that local overexploitation can be stopped by a smart relocation of wells from the main depression cones and the expansion of riverbank filtration. This could also avoid further land subsidence while the city's water demand is met.