The lake’s catchment drains 276,000 hectares, and reaches from the foothills of the Southern Alps, to the Rakaia river, the hills of Banks Peninsula and the plains in between. About three quarters of the catchment is made up of the Central Canterbury Plains. Over 40 streams and rivers feed the lake, some rising as springs within a few kilometres of the lake. Springs supply up to two-thirds of the fresh water that flows into the lake. The majority of the surface water comes from the rainfall in the foothills. Rainfall on the plains feeds the extensive groundwater aquifers.
Te Waihora is at the bottom of the catchment and is therefore a nutrient and sediment trap. The lake wetlands acted as a nutrient and sediment filter and played an important role in maintaing water quality. Human-induced change in the catchment, intensive farming, and clearing of wetlands have hastened the progression to a high nutrient / high sediment inflow and low flush / low water quality system. This decline has been amplified by the loss of the lake weed beds which held clear fresh water zones at the mouths of the streams and reduced turbulence and sediment disturbance. These beds were lost in the Wahine storm of 1968. The lake is now classified as highly eutrophic, but the shallowness of the lake and its exposure to wind keep the waters oxygenated and save it from regular toxic algal blooms.
The lake today covers 20,000 hectares, about half its historic level. Historically, the lake would breach the Kaitorete Spit at approximatley 4m amsl, and would extend inland as far as Tai Tapu.