With climate change and rising sea levels, the coastal zone’s flood risk is deteriorating. Previous researches have shown a gradually degrading capacity of traditional hard engineering structures (e.g., seawall, dikes) on flood mitigation due to problems such as land subsidence and insufficient maintenance. To remedy the defects, the “building with nature concept” for coastal protection with saltmarshes was examined by combining field measurements and numerical simulations. The advantages of saltmarsh over traditional seawall on flood protection was demonstrated from the perspective of both flood area mitigation and economic gain, based on scenario simulations. Results show that tidal wetlands are essential in mitigating significant wave heights (H_s) and current velocities even during storm conditions. The storm wave and current velocity reduction ratio (RR_w and RR_c) by saltmarshes on Chongming Dongtan Shoal (CMDS) during Typhoon 9711 is approximately 11% and 51%, respectively. The wave and current mitigation by Scirpus mariqueter are more efficient than Spartina alterniflora and Phragmites australis during measurements in 2010, which were approximately 0.3 m and 0.2 m/s, 0.125 m and 0.155 m/s, 0.086 m and 0.128 m/s per kilometer width, respectively. The summer saltmarsh area 54.2 km² on CMDS protects approximately 32 km² land area behind the seawall from being flooded, equivalent to the seawall heightening of approximately 0.42 m on equivalent flood mitigation. The performance of cost-and-benefit analysis shows a relatively higher (by 3%–7%) net present value (NPV) and a higher (by 1.5 times) benefit-cost ratio (BC) of nature-based solution (i.e., saltmarsh restoration) compared with traditional hard engineering solution (i.e., seawall construction). Thus, building seawall with nature, such as a hybrid flood protection measure, should be implemented in the future coastal redesign and maintenance.