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Small Island Developing States (SIDS) have long been recognized as some of the planet’s most vulnerable areas to climate change, notably to rising sea levels and coastal extremes. They have been crucial in raising ambitions to keep global warming below 1.5 °C and in advancing the difficult debate on loss and damage. Still, quantitative estimates of loss and damage for SIDS under different mitigation targets are lacking. Here we carry out an assessment of future flood risk from slow-onset sea-level rise and episodic sea-level extremes along the coastlines of SIDS worldwide. We show that by the end of this century, without adaptation, climate change would amplify present direct economic damages from coastal flooding by more than 14 times under high-emissions scenarios. Keeping global warming below 1.5 °C could avoid almost half of unmitigated damage, depending on the region. Achieving this climate target, however, would still not prevent several SIDS from suffering economic losses that correspond to considerable shares of their GDP, probably leading to forced migration from low-lying coastal zones. Our results underline that investments in adaptation and sustainable development in SIDS are urgently needed, as well as dedicated support to assisting developing countries in responding to loss and damage due to climate change.