Lakes on the Tibetan Plateau play critical roles in the water cycle of the ecological and environmental systems of the Plateau. A better understanding of lake variations on the Tibetan Plateau is important for evaluating climate change and regional environment consequence under global warming. In this paper, as a typical inland lake and one of three holy lakes on the Tibetan Plateau, as well as a scenic spot in southern Tibetan Plateau, variations of Yamzho Yumco area from 1972 to 2010 and main factors controlling the variations are analyzed using remote sensing and GIS technologies in combination with climate data of meteorological stations within the basin. The results show that mean lake area is 643.98 km² and mean perimeter is 709.41 km from 1972 to 2010. The lake areas generally have been decreasing from 1972 to 2010. Specifically, the lake area in the 1970s was 658.78 km² with the highest record of 678.42 km² in 1972; the lake areas were 636.55 km² and 635.06 km² in the 1980s and 1990s, respectively. There is an increasing trend from 1999 to 2004. The year 2004 is a turning point for lake area variations, which is the end of increasing since 1999 and the starting point to decease until 2010. The lake areas have been significantly decreasing since 2004 with the mean annual decreasing rate(MADR) of 8.59 km²/a, which is higher than MADR of 6.85 km² from 1972 to 1999. Especially, the smallest lake area, 600.26 km², was recorded in 2010. The gap between the largest in 1972 and the smallest in 2010 for lake areas is 78.16 km² with 11.52% of net areas in decease. The spatial variations of lake areas are characterized by the general shrinking trend from 1972 to 2010. Particularly, the shrinking distance reached 1.62 km in eastern part of the lake with 42.63 m/a and 1.52 km in northwestern part of the lake with 40.00 m/a. The area variations of the lake are mainly caused by precipitation fluctuation and the increasing evaporation within the basin. Especially, dramatic increasing in evaporation from 2004 is dedicated to shrinking in lake area, and the significant temperature increases through increasing evaporation accelerate this process. Therefore, the area variation of Yamzho Yumco reflects the response of inland lake mainly supplied by rainfall in semi arid climate zone in Tibetan Plateau to climate change. The impact of human activity and the engineering measures, such power plant construction, on the lake area variation is limited. However, if the design goal of the Yamzho Yumco Pumped Storage Power Station to keep the water in balance between the lake and the river is not fulfilled, the impact of the power station on water volume and lake areas should also be considered.