The Qiangtang Basin is a large endorheic basin in the inner part of the Tibetan Plateau and has been thought to be a dry region in contrast with its wet surrounding outer region that feeds all the major Asian rivers. Combining surface hydrological data with modelling and satellite data between 2002 and 2016, our study reveals that an enormous amount of water, approximately 54 ± 4 cubic kilometers, is unaccounted for annually in the Qiangtang Basin. The amount of missing water is comparable to the total annual discharge of the Yellow River. Data from the Gravity Recovery and Climate Experiment (GRACE) show little increase of local terrestrial water storage. Thus, the missing water must have flowed out of the basin through underground passages. Interpreting this result in the context of recent seismic and geological studies of Tibet, we suggest that a significant amount of meteoric water in the Qiangtang Basin leaks out by way of groundwater flow through deep normal faults and tensional fractures along the nearly N-S rift valleys that are oriented sub-normal to and cross the surficial hydrological divide on the southern margin of the basin. Cross-basin groundwater outflow of such a magnitude defies the traditional view of basin-scale water cycle and leads to a very different picture from the previous hydrological view of the Qiangtang Basin. The finding calls for major rethinking of the regional water balance.