The largest freshwater lake in Ethiopia, Lake Tana, has faced ecological disaster due to water hyacinth (Eichhornia crassipes) infestation. The water hyacinth is a threat not only to the ecology but also to the socioeconomic development of the region and cultural value of the lake, which is registered as a UNESCO reserve. This study aims to map the spatiotemporal dynamics of the water hyacinth using high-resolution PlanetScope satellite images and assesses the major environmental variables that relate to the weed spatial coverage dynamics for the period August 2017 to July 2018. The plausible environmental factors studied affecting the weed dynamics include lake level, water and air temperature, and turbidity. Water temperature and turbidity were estimated from the moderate resolution imaging spectroradiometer (MODIS) satellite image and the water level was estimated using Jason-1 altimetry data while the air temperature was obtained from the nearby meteorological station at Bahir Dar station. The results indicated that water hyacinth coverage was increasing at a rate of 14 ha/day from August to November of 2017. On the other hand, the coverage reduced at a rate of 6 ha/day from December 2017 to June 2018. However, the length of shoreline infestation increased significantly from 4.3 km in August 2017 to 23.4 km in April 2018. Lake level and night-time water temperatures were strongly correlated with water hyacinth spatial coverage (p < 0.05). A drop in the lake water level resulted in a considerable reduction of the infested area, which is also related to decreasing nutrient levels in the water. The water hyacinth expansion dynamics could be altered by treating the nutrient-rich runoff with best management practices along the wetland and in the lake watershed landscape.