Evapotranspiration (ET) is an important hydrological process that can be studied and estimated at multiple spatial scales ranging from a leaf to a river basin. We present a review of methods in estimating basin scale ET and its applications in understanding basin water balance dynamics. The review focuses on two aspects of ET: (i) how the basin scale water balance approach is used to estimate ET; and (ii) how ‘direct’ measurement and modelling approaches are used to estimate basin scale ET. Obviously, the basin water balance-based ET requires the availability of good precipitation and discharge data to calculate ET as a residual on longer time scales (annual) where net storage changes are assumed to be negligible. ET estimated from such a basin water balance principle is generally used for validating the performance of ET models. On the other hand, many of the direct estimation methods involve the use of remotely sensed data to estimate spatially explicit ET and use basin-wide averaging to estimate basin scale ET. The direct methods can be grouped into soil moisture balance modelling, satellite-based vegetation index methods, and methods based on satellite land surface temperature measurements that convert potential ET into actual ET using a proportionality relationship. The review also includes the use of complementary ET estimation principles for large area applications. The review identifies the need to compare and evaluate the different ET approaches using standard data sets in basins covering different hydro-climatic regions of the world.