The McMurdo Dry Valleys, Antarctica, are a polar desert populated with numerous closed-watershed, perennially ice-covered lakes primarily fed by glacial melt. Lake levels have varied by as much as 8 m since 1972 and are currently rising after a decade of decreasing. Precipitation falls as snow, so lake hydrology is dominated by energy available to melt glacier ice and to sublimate lake ice. To understand the energy and hydrologic controls on lake level changes and to explain the variability between neighboring lakes, only a few kilometers apart, we model the hydrology for the three largest lakes in Taylor Valley. We apply a physically based hydrological model that includes a surface energy balance model to estimate glacial melt and lake sublimation to constrain mass fluxes to and from the lakes. Results show that lake levels are very sensitive to small changes in glacier albedo, air temperature, and wind speed. We were able to balance the hydrologic budget in two watersheds using meltwater inflow and sublimation loss from the ice-covered lake alone. A third watershed, closest to the coast, required additional inflow beyond model uncertainties. We hypothesize a shallow groundwater system within the active layer, fed by dispersed snow patches, contributes 23% of the inflow to this watershed. The lakes are out of equilibrium with the current climate. If the climate of our study period (1996-2013) persists into the future, the lakes will reach equilibrium starting in 2300, with levels 2-17 m higher, depending on the lake, relative to the 2020 level.