Wetlands in regional discharge areas of the Red River Valley of eastern North Dakota provide runoff, flood protection and wildlife habitat. Two years of groundwater and soil water monitoring were used to characterize the hydrology of a 500 ha wetland 24 km north-west of Grand Forks. The objective was to describe, monitor and model important water budget processes. From November through March 1990 and 1991, the water-table dropped as water flowed towards frost in the vadose zone. Where saturated soils occurred near the surface, the water-table rose quickly in the spring. A later, larger rise occurred where the water-table and capillary fringe were deeper. During the summer, precipitation was rapidly depleted by evapotranspiration (ET). The low hydraulic conductivity of the clayey lacustrine sediments (0.1 -2 m/yr) combined with a small horizontal hydraulic gradient results in minimal lateral and maximum vertical flow. The US Geological Survey MODFLOW code was used to simulate vertical saturated flow. By including actual ET (estimated from potential evaporation) and using the recharge option to represent vadose flow, the model provided good correspondence between observed and simulated hydrographs. These results suggest that a shallow vertical flow of ground and soil water dominates the hydrological budget. Simulation of unusually dry conditions, such as those experienced during the 1930s, indicates that water levels in the wetland would reach a steady-state about 0.3 m lower than normal within two to three years. Less winter vadose storage would decrease the water-level rise in spring and early summer, but would have a minimal impact on the overall yearly water budget.