Exploitation of the Alberta oil sands, the world’s third-largest crude oil reserve, requires fresh water from the Athabasca River, an allocation of 4.4% of the mean annual flow. This allocation takes into account seasonal fluctuations but not long-term climatic variability and change. This paper examines the decadal-scale variability in river discharge in the Athabasca River Basin (ARB) with (i) a generalized least-squares (GLS) regression analysis of the trend and variability in gauged flow and (ii) a 900-y tree-ring reconstruction of the water-year flow of the Athabasca River at Athabasca, Alberta. The GLS analysis removes confounding transient trends related to the Pacific Decadal Oscillation (PDO) and Pacific North American mode (PNA). It shows long-term declining flows throughout the ARB. The tree-ring record reveals a larger range of flows and severity of hydrologic deficits than those captured by the instrumental records that are the basis for surface water allocation. It includes periods of sustained low flow of multiple decades in duration, suggesting the influence of the PDO and PNA teleconnections. These results together demonstrate that low-frequency variability must be considered in ARB water allocation, which has not been the case. We show that the current and projected surface water allocations from the Athabasca River for the exploitation of the Alberta oil sands are based on an untenable assumption of the representativeness of the short instrumental record.