We investigated the relationship between total annual flow of water in the Macquarie River and the extent of flooding in the northern part of the Macquarie Marshes and trends in waterbird populations from 1983 to 1993. The amount of water in the Macquarie River measured each year within the Macquarie Marshes explained about 86% of the variation in area flooded in the northern part of this wetland. This allowed use of long-term data on flow at Oxley, a gauge within the Macquarie Marshes, as an index to flooding. Annual flows at Oxley have decreased significantly for high and medium rainfall events in the catchment, despite no trend in rainfall between 1944 and 1993. The area flooded by large floods has contracted by at least 40–50% during the last 50 years (1944–1993). Water use has progressively increased upstream in the period, depriving the Macquarie Marshes of water: 51% of all water passing Dubbo each year, a gauge 100 km upstream, reached the Macquarie Marshes in the period 1944–1953, but by 1984–1993 this had declined to 21%. Numbers of species and density of waterbirds on the northern part of the Macquarie Marshes declined between 1983 and 1993. Three other wetlands, not affected by water abstractions, showed no declines. We believe the decline was due to wetland degradation as a result of decreased flooding. We estimated more than 88,000 waterbirds in the Macquarie Marshes in October 1984, establishing the site as an important wetland site in Australia. The extent and viability of this wetland will depend on maintaining or increasing the water supply.