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Urban lakes in many places around the world are rapidly becoming vulnerable because of such factors as urbanization, climate change, anthropogenic pollutant inputs, etc. The influence of such forcing factors on lakes hydrology must be correctly recognized and addressed in order to protect them over the long term. Facing similar challenges, Sukhna Lake, an urban lake in northern India, has apparently dried up frequently in the recent past. Numerous hypotheses were subsequently proposed to isolate the possible factors affecting the lake and its water budget, including the potential impacts of land use changes, climate change, anthropogenic activities and other natural processes. Using meteorological data, lake‐catchment information and a hydrologic model, these hypotheses were comprehensively analysed. Relevant data on rainfall, wind, temperature, lake inflows, groundwater, lake physical characteristics, catchment land uses, soil texture, etc., were gathered for the analysis. A temporal trend analysis of factors relevant to these hypotheses was undertaken to identify critical drivers of hydrological changes. A sensitivity analysis also was performed, using the lake water budget, to determine and prioritize the predominant factors affecting the lake, leading to the creation of an annual lake water budget for the period from 1971 to 2013, highlighting the lake inflows and outflows. The lake annual inflow (catchment run‐off) was computed by adopting a rainfall–run‐off model based on the SCS‐curve number. Lacking any anthropogenic water withdrawals, the outflow was quantified by estimating the evaporation loss (using the FAO‐based Penman–Monteith Equation). The results of the present study  indicate that the process of siltation and the construction of check dams in the catchment, rather than urbanization and climate change, were the dominating reasons contributing to changes in the lake hydrology, and affecting the lake most in recent years. [ABSTRACT FROM AUTHOR]