Discharge from basins joining a lake is the main factor determining the lake volume and sediment inflow to the lake. Suspended sediment is an important parameter for describing the water quality of aquatic ecosystems. Lake Tana is an important and the largest lake in Ethiopia for the local ecological system. However, environmental change and anthropogenic activities in the area threaten its water quality. The conventional methods of suspended sediment concentration (SSC) observation are unable to determine and compare spatial and temporal SSC patterns for the lake over a period of years. Remote sensing methods have made it possible to map SSC. The objective of this study is to characterize the spatial and temporal distribution of suspended sediment of Lake Tana using in situ measurement and remote sensing applications and specifically to develop a relationship between in situ and remote sensing observation to retrieve suspended sediment concentration and map the spatal distribution of SSC. This study used MODIS‐Terra and in situ data to characterize the spatial and temporal distribution of SSC in the rainy season. Four sampling campaigns (20 samples per campaign) were carried out on Lake Tana, and the first three sampled campaigns on May 11–13, 2018, June 08–10, 2018, and July 15–17, 2018, were used for calibration of regression models. MODIS‐Terra reflectance in NIR was found best related to in situ water quality data and varies linearly with SSC (r2 = 0.81) and turbidity (r2 = 0.85). Secchi disc depth (SDD) found the best fit for a power relation with NIR band reflectance (r2 = 0.74). The MODIS‐Terra reflectance in red was found to be poorly related to in situ measurements. The relation in NIR reflectance was validated using the LOOCV (leave‐one‐out‐cross‐validation) technique and the fourth sampled data set collected on August 12–14, 2018. Developed models are validated with RMSE of 42.96 mg/l, 14.6 NTU, and 0.17 m, ARE of 23.3%, 27.6%, and 12.4%, and RRMSE of 25.1%, 44.5%, and 29.6% for SSC, turbidity, and SDD, respectively, using LOOCV. The equation was also validated using August 2018 collected data sets with RMSE of 87.6 mg/l, 11.7 NTU, 0.08 m, ARE of 20.8%, 25.9%, and 28.8%, and RRMSE of 17.8%, 20.5%, and 27.9% for SSC, turbidity, and SDD, respectively. Applying the developed regression model, a 10‐year time series of SSC from 2008–2017 for May‐August was estimated and the trend was tested using the Mann–Kendall trend test. It was found that an increasing trend was observed from the period 2008 to 2017. The result shows that satellite data like the MODIS‐Terra imagery could be used to monitor and obtain past records of SSC with the developed equation. The increasing SSC can be reduced by implementing selected management practices in the surrounding watersheds of the lake to reduce nutrient and sediment inflow.