The Prespa–Ohrid lake system in the southwest Balkan region is the oldest permanent lake system in Europe and a global hotspot of biodiversity and endemism. Its smaller component, Lake Macro Prespa (or simply called Prespa), shared by North Macedonia, Albania and Greece has suffered a dramatic water-level fall (nearly 10 m since the 1950s). It was greater in the periods 1987–1993 and 1998–2004 and has further accelerated in the last 5 years. Analysis of satellite images (remote sensing) revealed that over the period 1984–2020 Prespa Lake lost 18.87 km2 of its surface (6.9% of its size, dropping from 273.38 km2 to 254.51 km2), with a decline in the volume of water estimated as about 54%, even reaching 56.8% in 2022. The environmental status of the lake has also been compromised and the process of its eutrophication is enhanced. The aim of this study is to summarize the current understanding of the diminishing trend in the water level and the factors that have contributed to it. The lake is highly sensitive to external impacts, including climate change, mainly restricted precipitation and increased water abstraction for irrigation. Importantly, nearly half of its outflow is through karst aquifers that feed Ohrid Lake. Of note, the hydrology and especially hydrogeology of the catchment has not been studied in sufficient detail and accurate data for the present state are missing, largely due to a lack of coordinated investigations by the three neighboring countries. However, recent estimation of the water balance of Prespa Lake, elaborated with the consideration of only the natural sources of inflow (precipitation and river runoff) and outflow (evaporation and loss of water through the karst channels) suggested a negative balance of 53 × 106 m3 annually. Our study also offers an estimated projection for the water level in the future in different climate scenarios based on linear regression models that predict its complete loss before the end of the present century.