Changes in precipitation can be expected to have a major influence on the frequency and severity of flooding in the Taihu Basin. As part of an integrated assessment of flood risk in the Taihu Basin, this paper addresses the hydrological conditions and the potential impacts of climate change on Taihu Lake water levels. The hydrological system is simulated by using the distributed hydrological model VIC (Variable Infiltration Capacity), with future climate scenarios generated by the regional climate model PRECIS (Providing Regional Climates for Impacts Studies). The results indicate that maximum and mean flood water levels under the A2 and B2 scenarios for 2021–2050 will be higher than the levels during the baseline period (1961–1990), with larger increases under the B2 scenario than for the A2 scenario. The storm return periods leading to extreme water levels in the Taihu Lake in the future is projected to decrease significantly in comparison to the baseline period, implying the potential for the more frequent occurrence of major floods. These results indicate the importance of planning for future flood control in the Taihu Basin.