The seasonal groundwater level decline due to dry season groundwater evapotranspiration and lateral groundwater flow, and the hydraulic connections of the shallow groundwater with the Lake Tana in the Dembia flood plain, North of Ethiopia had be studied. Studies show that shallow groundwater evapotranspiration in tropical regions is huge. So, there is a need to quantify the shallow groundwater evaporation in the area during the dry season. For this, fourty seven groundwater observation wells distributed over the plain are identified. The groundwater table are observed in these wells on bi-weekly time step over a period in 2016/17. This helps us to understand the shallow groundwater table fluctuations in the seasons. Our observations showed that in the year, the groundwater level reached the surface during the rainy monsoon phase around third week of July. The hydraulic conductivity for the groundwater is needed to calculate the groundwater flux. It was determined from four disturbed soil samples taken from near four well locations using the falling head permeameter. The average hydraulic conductivity was 0.00034m/day. The slope of ground surface elevation and predicted groundwater elevations in the transect section was computed. The ground surface has a general slope of 0.00094. The steepest gradient of groundwater is approximately 0.0009 and the general hydraulic gradient is about 0.00088 from the farthest point to the Lake. This showed that the shallow groundwater is flowing to the lake about a distance of 5.6km starting from the farthest point to the Lake. The slope is less (negative) near the lake because of the intrusion of the lake water to the groundwater, which is the amount of Lake water transported to groundwater about a distance of 4.6km. There is hydraulic connection between the shallow groundwater in the plain and the Lake Tana, and has the computed specific discharge using the average hydraulic conductivity and the general hydraulic gradient is as low as 3.0*10-7m/day, which is negligible. Thus, all changes in the elevation of the water table are due to recharge or evaporation. At well locations, the actual evaporation from the linear evapotranspiration function for the groundwater table depth was computed as 928mm and the maximum cumulative evaporation at the end of the dry phase was 874mm.