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Alqueva Reservoir is one of the largest artificial lakes in Europe and is a strategic water storage for public supply, irrigation, and energy generation. The reservoir is integrated within the Multipurpose Alqueva Project (MAP), which includes almost 70 reservoirs in a water-scarce region of Portugal. The MAP contributes to sustainability in southern Portugal and has an important impact on the entire country. Evaporation is the key component of water loss from the reservoirs included in the MAP. Evaporation from Alqueva Reservoir has been estimated by indirect methods or pan evaporation measurements; however, specific experimental parameters such as the pan coefficient were never evaluated. Eddy covariance measurements were performed at Alqueva Reservoir from June to September in 2014 as this time of the year provides the most representative evaporation volume losses in a Mediterranean climate. This period is also the most important period for irrigated agriculture and is, therefore, the most problematic period of the year in terms of managing the reservoir. The direct pan evaporation approach was first tested, and the results were compared to the eddy covariance evaporation measurements. The total eddy covariance (EC) evaporation measured from June to September 2014 was 450.1 mm. The mean daily EC evaporation in June, July, August, and September was 3.7, 4.0, 4.5, and 2.5 mm d−1, respectively. A pan coefficient, Kpan, multivariable function was established on a daily scale using the identified governing factors: air temperature, relative humidity, wind speed, and incoming solar radiation. The correlation between the modelled evaporation and the measured EC evaporation had an R2 value of 0.7. The estimated Kpan values were 0.59, 0.57, 0.57, and 0.64 in June, July, August, and September, respectively. Consequently, the daily mean reservoir evaporation (ERes) was 3.9, 4.2, 4.5, and 2.7 mm d−1 for this 4-month period and the total modelled ERes was 455.8 mm. The developed Kpan function was validated for the same period in 2017 and yielded an R2 value of 0.68. This study proposes an applicable method for calculating evaporation based on pan measurements in Alqueva Reservoir, and it can be used to support regional water management. Moreover, the methodology presented here could be applied to other reservoirs, and the developed equation could act as a first evaluation for the management of other Mediterranean reservoirs.