This paper presents new calculations of Lake Victoria's water balance. Evaporation is estimated using both the Penman formula and the energy balance approach, and sensitivity studies are performed to determine the influence of input data on the estimates. Rainfall over the lake is estimated from catchment rainfall using a relationship between the two that was derived using satellite data. The results, using the reference period 1956–1978, indicate that mean annual rainfall over the lake is 1791 mm, compared to mean annual evaporation of 1551 mm. When compared with lake level changes, tributary inflow, and discharge during this period, there is a resultant imbalance of 19 mm. Adding this amount to the calculated evaporation, we are able to reproduce with great accuracy the lake level changes during the period 1956–1978 utilizing precipitation estimates of this study plus measured inflow and discharge. Sensitivity studies show that the discrepancy in the balance of 19 mm is considerably smaller than the error in evaporation calculations that can be introduced by uncertainties in the input data. Of particular concern is cloudiness. The diurnal cycle of cloudiness is quite different over the lake than at shoreline stations and the total cloud cover over the lake is probably lower than at these stations. A change from 50% cloudiness to 30% can increase evaporation by about 30%. Thus, this study underscores the need for adequate cloud data, sufficient to resolve the diurnal cycle, as well as direct estimates of lake rainfall in assessing the lake's water balance.