Hulun Lake is located in the Hulun Buir Grassland in Inner Mongolia and is an important component of the northern ecological barrier of China. Fluctuations in its area directly affect the stability of the surrounding ecological environments. In this study, Hulun Lake was taken as the study object, and meteorological data, water body area, water level, reservoir capacity, runoff volume, and social statistical data were used to study the dynamic changes in Hulun Lake and the critical driving forces. We constructed a balance analysis equation, determined the role of groundwater in the water cycle, and examined the minimum ecological water demand of Hulun Lake. The results of the analyses revealed that during the last 55 years, the variation trends of the water level, area, and reservoir capacity were generally consistent and could be divided into six stages. The increased temperature decreased precipitation, and increased evaporation resulted in decreased water flow from the major rivers supplying the lake, which was the main cause of the decrease in the water level and area of Hulun Lake. Groundwater was involved in the water cycle of Hulun Lake. After deducting the seepage and surface drainage, we found that the groundwater recharge volume was around 792 million m3 yearly. Based on the environmental, ecological, and production functions of Hulun Lake, the minimum ecological water demand is 11.272 billion m3.