Based on daily water level observations of Taihu Lake during the period from 1954 to 2013, changes of three water level characteristic factors, including the highest annual water level, lowest annual water level, and mean annual water level, were analyzed and compared. In combination with rainfall and water diversion data from the Taihu Lake Basin, the dominant factors driving the three water level characteristic factors are illustrated. Results showed that changes of the highest annual water level were not significant during the period from 1954 to 2013 and its inter-annual variation was mainly controlled by the inter-annual periodic fluctuation of flood season precipitation in the Taihu Lake Basin. However, the lowest annual water level and mean annual water level of Taihu Lake were increasing significantly, with their inter-annual variations mainly controlled by the precipitation fluctuation in the Taihu Lake Basin before 2000. After 2000, their inter-annual variations were mainly controlled by the massive water diversions, such as the water diversion from the Yangtze River to Taihu Lake, maintaining high levels of the lowest annual water level and mean annual water level in spite of less precipitation. In addition, water diversion from the Yangtze River to Taihu Lake causes significant changes of the seasonal distribution characteristics of the occurrence time of the lowest annual water level of Taihu Lake.