Flow systems and hydrochemistry of groundwater in the glacial drift and shallow dolostone bedrock, and a water budget of three closed lakes located in a zone of active groundwater discharge are discussed in this study of the Shoal Lakes basin in south-central Manitoba. The southerly movement of groundwater in the dolostone as concluded from the distribution of hydraulic head is confirmed by hydrochemical data. The Shoal Lakes and adjacent low-lying areas are located in a zone of active groundwater discharge marked by flowing wells in the dolostone and discharge gradients in the glacial drift. Groundwater is supersaturated with respect to calcite and dolomite and the concentrations of Ca++, Mg++, and HCO3- in general exceed values anticipated using a dolomite dissolution model. The precipitation of calcite as a result of CO2 degassing in the unsaturated zone accounts for supersaturations with respect to both calcite and dolomite and observed Ca++/Mg++ ratios less than 1. Small amounts of halite and gypsum disseminated throughtout the drift and bedrock account for observed concentrations of Na+, Cl-, and SO4=. Excess Na+ is due to cation exchange. A decline of 9cm (3.5 in) in the level of North Shoal Lake occured during a four month period when net evaporation losses totaled 53 cm (20.8 in). Groundwater input to the lake, as a significant portion of the lake budget, is postulated on the basis of piezometric and hydrochemical data.