This paper shows the feasibility of using steady state water balances of gauged catchments to calibrate a spatially explicit evaporation model and then applying this to estimate mean annual runoff for 120 gauged catchments in the Murray-Darling Basin (MDB) of Australia from 2001 to 2005. We used remotely sensed leaf area indices from the Moderate Resolution Imaging Spectrometer (MODIS) mounted on the polar-orbiting Terra satellite with the Penman-Monteith equation, gridded meteorology, and a two-parameter biophysical model for surface conductance (G s) to estimate 8-day average evaporation at 1-km resolution. Parameters for the G s model were optimized using steady state water balance estimates (precipitation minus runoff) in the gauged catchments in three precipitation zones of the MDB, and the calibrated evaporation model was then used to estimate evaporation (E RS) and runoff from gauged and ungauged catchments in the MDB. Mean annual calibrated estimates of E RS compared well with water balance estimates, indicated by a root-mean-square error (RMSE) of 78.6 mm/a and the Nash-Sutcliffe coefficient of efficiency (CE) of 0.68. Reasonable agreement was obtained between the estimated mean annual runoff (R RS) (rainfall minus E RS), and the measured runoff (RMSE = 71.0 mm/a and CE = 0.75). Cross validation showed that estimated E RS and R RS were almost as good as the calibrated ones. Furthermore, R RS has an accuracy similar to that of a seven-parameter conceptual rainfall-runoff model in the gauged catchments. The results show that the evaporation model can be easily applied to estimate steady state evaporation and runoff and that E RS can be used with rainfall-runoff models to improve accuracy of estimated runoff in ungauged catchments.