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The Mexico City region has several flat plains formed on exceptionally porous (60–90%) lacustrine deposits overlying a highly productive regional aquifer. Severe land subsidence due to consolidation of the lacustrine aquitard caused by aquifer exploitation has resulted in restrictions on pumping in the core of Mexico City. This has led to large increases in aquifer pumping in the outlying lacustrine plains where satellite communities are rapidly expanding. The Chalco Basin is one of these lacustrine areas where pumping began in the 1950s and greatly increased in the 1980s. The lacustrine sequence in the Chalco area is significantly thicker than anywhere else in the Basin of Mexico averaging 100 m and reaching a maximum thickness of 300 m. Consequently, this area is susceptible to the highest potential land subsidence effects as a result of groundwater extraction of anywhere in the basin. Land subsidence in the central part of the Chalco Basin has increased to 0.4 m/yr since 1984 and by 1991 total subsidence had reached 8 m. The rapid land subsidence in this area is causing the accumulation of meteoric waters during the rainy season resulting in extensive flooding of farmland. This study first demonstrates a methodology for combining hydraulic data from a network of monitoring wells, geotechnical data from core samples, and a compilation of historical information on land surface elevation to quantify groundwater flow and land subsidence phenomena within the rapidly subsiding Chalco Basin. Then a one‐dimensional mathematical model is employed to develop predictions of future land subsidence under a range of pumping conditions. The model permits the hydraulic properties of the aquitard to vary as transient functions of hydraulic head and porosity. Simulations suggest that under current pumping rates, total land subsidence in the area of thickest lacustrine sediment will reach 15 m by the year 2010. If pumping is reduced to the extent that further decline in the potentiometric surface is prevented, total maximum subsidence would be significantly less, ∼10 m, and the rate would nearly cease by 2010.