In this study we estimate the regional terrestrial water storage change (TWSC) and evapotranspiration (ET) in Illinois (∼2 × 105 km2) from reanalysis data for a 22‐year period (1984–2005) using terrestrial and atmospheric water balance computations. The estimates are compared with in situ observations of TWSC as well as ET, derived as the residual of observed precipitation, streamflow, and TWSC. The 22‐year mean annual cycles of estimated TWSC and ET agree well with observations. Monthly estimates of TWSC and ET match favorably with observations, with correlation coefficients of 0.66 and 0.69, respectively. However, annual average TWSC and ET estimates significantly deviate from the observations; the correlation coefficient drops to 0.31 and 0.19, respectively. A 52‐mm/a imbalance (17% of the average streamflow in Illinois) was found between the mean water vapor convergence and streamflow, which also results in a similar magnitude of error in the estimated TWSC and ET based on reanalysis convergence. This imbalance is due in large part to the systematic bias in reanalysis data. It is concluded that the reanalysis data have the potential to estimate the climatology and monthly TWSC and ET variations but are not suitable for the diagnosis of their interannual variability. This is due to the accumulation, rather than cancellation, of the systematic errors in the reanalysis data. Whether the average streamflow would balance the average convergence depends on which particular period of time is under analysis. A longer time period of analysis does not necessarily ensure the balance between streamflow and convergence, as commonly assumed in regional water balance analyses.