The increased demand for water from Lake Sibayi and the associated groundwater system combined with decreasing rainfall has resulted in a significant reduction in lake levels over the past decade. Moreover, extensive Eucalyptus and pine plantations in the catchment transpire large quantities of groundwater, adding extra pressure on the already stressed water resource. Groundwater recharge was calculated using the chloride mass balance (CMB) method and the results correlated with results obtained from published maps. The methods gave an average recharge estimate of 112.7 mm/a (12% of MAP) and 94.5 mm/a (10% MAP), respectively. The total evaporation and evapotranspiration from the lake and its catchment was estimated at 1 491 mm/a and 1 090 mm/a respectively. A 15-year water balance for the catchment was undertaken to determine the impact of various components on the system. The water balance of Lake Sibayi shows that lake levels fluctuate in response to varying amounts of groundwater and surface water inflow into the lake, seepage loss through the coastal dune, abstraction, and evaporation from the lake. The hydrochemical compositions of the 33 samples collected from various water sources are similar, with the shallow aquifers dominated by Na-Cl and the deep aquifers dominated by a Na-Ca-HCO3 hydrochemical facies, respectively.