This study demonstrates an approach to expand and improve the current prediction capability of the National Water Model (NWM). The primary objective is to examine the potential benefit of real-time local stage measurements in streamflow prediction, particularly for local communities that do not benefit from the improved streamflow forecasts due to the current data assimilation (DA) scheme. The proposed approach incorporates real-time local stage measurements into the NWM streamflow DA procedure by using synthetic rating curves (SRC) developed based on an es-tablished open-channel flow model. For streamflow DA and its evaluation, we used 6-yr (2016–21) data collected from 140 U.S. Geological Survey (USGS) stations, where quality-assured rating curves are consistently maintained (verification stations), and 310 stage-only stations operated by the Iowa Flood Center and the USGS in Iowa. The evaluation result from NWM's current DA configuration based on the USGS verification stations indicated that DA improves streamflow prediction skills significantly downstream from the station locations. This improvement tends to increase as the drainage scale becomes larger. The result from the new DA configuration including all stage-only sensors showed an expanded domain of improved predictions, compared to those from the open-loop simulation. This reveals that the real-time low-cost stage sensors are beneficial for streamflow prediction, particularly at small basins, while their utility appears to be limited at large drainage areas because of the inherent limitations of lidar-based channel geometry used for the SRC development. The framework presented in this study can be readily applied to include numerous stage-only stream gauges nationwide in the NWM modeling and forecasting procedures.