We estimate terrestrial water storage variations using time variable gravity changes observed by the Gravity Recovery and Climate Experiment (GRACE) satellites during the first 2 years of the mission. We examine how treatment of low-degree gravitational changes and geocenter variations affect GRACE based estimates of basin-scale water storage changes, using independently derived low-degree harmonics from Earth rotation (EOP) and satellite laser ranging (SLR) observations. GRACE based water storage changes are compared with estimates from NASA's Global Land Data Assimilation System (GLDAS). Results from the 22 GRACE monthly gravity solutions, covering the period April 2002 to July 2004, show remarkably good agreement with GLDAS in the Mississippi, Amazon, Ganges, Ob, Zambezi, and Victoria basins. Combining GRACE observations with EOP and SLR degree-2 spherical harmonic coefficient changes and SLR observed geocenter variations significantly affects and apparently improves the estimates, especially in the Mississippi, Ob, and Victoria basins.