Topology adaptive water boundary extraction from satellite images using parametric snakes remains challenging in the domain of image segmentation. This paper proposed a modified balloon snake (MB-Snake) method based on the balloon snake (B-Snake) method, overcoming the B-Snake’s drawbacks of inaccurate positioning, topology inflexibility, and non-automatic contour evolution termination. Six satellite images, acquired by the GF-1 wide field of view sensor and with water bodies of different types, inner land numbers, areas, boundary and background complexities, and digital number value contrasts, were used as experimental images, in which the MB-Snake method, and two comparison methods, the B-Snake and the orthogonal topology adaptive snake (OT-Snake) methods, were applied for water boundary extraction. All the extracted results were first qualitatively assessed and further quantitatively evaluated via three indexes, including correctness, completeness, and area overlap measure. Both of the qualitative and quantitative evaluation results consistently demonstrated that the MB-Snake method can efficiently improve the positioning accuracy, detect and dispose of topology collisions, and perform automatic contour evolution termination, successfully meeting its design objectives, and exhibiting great superiority to the existing topology-flexible parametric snakes. The sensitivity to initial contours, the effects of model parameters, and spatial resolutions of satellite images, and image demands of the MB-Snake method was also analyzed.