We assessed the effects of historical (1931--1998) changes in both land use and climate on the water budget of a rapidly urbanizing watershed, Ipswich River basin (IRB), in northeastern Massachusetts. Water diversions and extremely low flow during summer are major issues in the IRB. Our study centers on a detailed analysis of diversions and a combined empirical/modeling treatment of evapotranspiration (ET) response to changes in climate and land use. A detailed accounting of diversions showed that net diversions increased due to increases in water withdrawals (primarily groundwater pumping) and export of sewage. Net diversions constitute a major component of runoff (20% of streamflow). Using a combination of empirical analysis and physically based modeling, we related an increase in precipitation (2.7 mm/yr) and changes in other climate variables to an increase in ET (1.7 mm/yr). Simulations with a physically based water-balance model showed that the increase in ET could be attributed entirely to a change in climate, while the effect of land use change was negligible. The land use change effect was different from ET and runoff trends commonly associated with urbanization. We generalized these and other findings to predict future streamflow using climate change scenarios. Our study could serve as a framework for studying suburban watersheds, being the first study of a suburban watershed that addresses long-term effects of changes in both land use and climate, and accounts for diversions and other unique aspects of suburban hydrology.