Small-scale heterogeneities and large changes in hydraulic gradient over short distances can create preferential groundwater flow paths that discharge to lakes. A 170 m2 grid within an area of springs and seeps along the shore of Shingobee Lake, Minnesota, was intensively instrumented to characterize groundwater-lake interaction within underlying organic-rich soil and sandy glacial sediments. Seepage meters in the lake and piezometer nests, installed at depths of 0·5 and 1·0 m below the ground surface and lakebed, were used to estimate groundwater flow. Statistical analysis of hydraulic conductivity estimated from slug tests indicated a range from 21 to 4·8 × 10−3 m day−1 and small spatial correlation. Although hydraulic gradients are overall upward and toward the lake, surface water that flows onto an area about 2 m onshore results in downward flow and localized recharge. Most flow occurred within 3 m of the shore through more permeable pathways. Seepage meter and Darcy law estimates of groundwater discharge agreed well within error limits. In the small area examined, discharge decreases irregularly with distance into the lake, indicating that sediment heterogeneity plays an important role in the distribution of groundwater discharge. Temperature gradients showed some relationship to discharge, but neither temperature profiles nor specific electrical conductance could provide a more convenient method to map groundwater–lake interaction. These results suggest that site-specific data may be needed to evaluate local water budget and to protect the water quality and quantity of discharge-dominated lakes. Copyright © 2002 John Wiley & Sons, Ltd.