Stormwater runoff is a primary carrier of pollutants to the nearby streams and lakes in the Puget Sound region. Green Stormwater Infrastructure (GSI) is built to intercept stormwater runoff to mitigate peak flows and stormwater pollutants before they reach surface waters. A rain garden is a type of GSI comprising a plant-soil system where water retention and pollutant mitigation is maximized through infiltration and storage. Proper placement of rain gardens within the watershed is crucial to maximizing their cost-effectiveness. The Lower Puyallup River Watershed, situated in South Puget Sound, consists of primarily residential areas of the cities of Puyallup and Tacoma. Preventing water quality impairment is essential as the streams and rivers in the watershed are critical habitat for Chinook and Coho salmon that return for spawning. The study's objective was to develop a framework to identify suitable sites for rain gardens in an urbanizing watershed. An indexing approach to identify Hydrological Sensitive Areas (HSA) was adopted, in which we considered the topography, runoff contributing area, soil depth, and hydraulic conductivity. The Topographic Wetness Index (TWI) and Soil Water Storage Capacity (SWSC) were computed to obtain the Hydrologic Sensitivity Index (HSI). Areas considered infeasible per criteria specified by state and county regulations were removed, and the HSI was classified based on suitability for the construction of rain gardens. The moderate HSI range (8.2–11.8) was deemed most suitable for rain garden placement in the study area. More than 500 suitable sites were identified providing a practical, scalable, and transferrable tool for prioritizing the placement of rain garden for stormwater runoff management.