A flood routing and stage prediction model is developed using the techniques of State Space and Kalman filtering. The governing equation is the physically based hydrologic method of flood routing with the output being an optimal estimate of stage given known inputs of streamflow. These equations are developed in state space and the Kalman filter is employed to estimate the flow and river stage. The model is applied to the Toutle and Cowlitz Rivers in the State of Washington, where the stage is affected by a shifting bed elevation. With the deterministic inputs at Mayfield Dam on the Cowlitz and Tower Road on the Toutle, the optimal output of stage is predicted at Castle Rock on the Cowlitz River. Addition of the Kalman Filter improves stage prediction based on an application to an observed storm event.