Water hyacinth (Eichhornia crassipes) is a widespread invasive plant in tropical and subtropical regions, creating serious ecological and hydrological problems. Beyond disrupting aquatic ecosystems, it increases unaccounted water loss and alters key physicochemical properties. This study evaluated the evapotranspiration of water hyacinth and its influence on water quality in Lake Tana, Ethiopia’s largest freshwater lake. Two artificial ponds (one control and one covered with water hyacinth), each measuring 1 m × 1 m × 0.94 m, were monitored over three months to quantify water loss. In parallel, water samples were collected from the lake at 0.5 m depth along 2 km intervals, comparing hyacinth infested and open-water sites. The results showed clear differences between conditions. Dissolved oxygen was significantly lower in hyacinth-covered areas (6.65 ± 0.44 mg/L) than in open water (7.93 ± 0.42 mg/L). Similarly, pH decreased under hyacinth cover (5.53 ± 0.53) compared to non-infested sites (6.53 ± 0.40). In contrast, water temperature increased in infested areas (23.70 ± 0.42 °C) relative to open water (22.08 ± 0.33 °C). Total dissolved solids were slightly but significantly lower in hyacinth-covered water. Evapotranspiration from water hyacinth was about 1.6 times higher than evaporation from open water, with an estimated monthly loss of 0.28 m³ per square meter. When scaled to lake conditions, this corresponds to approximately 0.78 to 7.01 million m³ of water loss per month, though actual values may vary due to environmental factors. Overall, water hyacinth substantially affects both water quantity and quality, highlighting its importance for lake management and sustainable water use.