Lake Toba, the largest and deepest volcanic lake in Indonesia, is a vital hydrospace asset for the country. Over the years, numerous studies have examined the lake, with recent findings indicating environmental degradation, including declining water quality and threats to its iconic beauty. This paper explores the status of Lake Toba by synthesizing various interrelated factors that have shaped its unique conditions and analysing key environmental challenges. The author compiles reports and research to provide a comprehensive hydrological and environmental overview of the lake. Lake Toba is currently facing significant environmental pressures, including land use changes in its catchment, increasing pollution loads, and unbalanced water releases. Its hydrological regime, inferred from seasonal water level fluctuations, has undergone notable changes. Historical records show that in 1914, the lake’s lowest and highest water levels were +905.42 m and +906.92 m above sea level, with corresponding outflows of 87 m³/s and 147 m³/s at the Asahan River. By 2017, these levels had declined to +902.90 m and +903.42 m, with outflows of 89.6 m³/s and 97.3 m³/s, respectively. Alarmingly, further analysis indicates an average water level decline of 1.1 meters over the past 60 years, with no significant changes in inflow except during El Niño years (1984 and 1997). This declining trend raises concerns about the potential mixing of deeper water layers (hypolimnion), where dissolved oxygen levels fall below 2 mg/L, posing risks to the lake’s ecological health. Government policies addressing hydrological and environmental challenges alone are insufficient unless complemented by community-driven initiatives that transform social behaviour and promote incentives for green development along the lake. Two key recommendations emerge from this analysis. First, mitigating the impacts of climate variability on large water bodies like Toba requires establishing a balanced water management strategy to prevent excessive drawdowns from hydroelectric power generation. This measure would also reduce the risk of vertical water mixing, which could further degrade surface water quality. Second, a comprehensive pollution control plan is essential, including continuous monitoring and legal enforcement of both point and non-point pollution sources, such as caged intensive fisheries. Adapting these measures to the lake’s current usage is crucial for maintaining the delicate balance of its ecosystem.