Abstract: Xinjiang is located in Eurasia hinterland and has a typical arid inland climate. Oasis in wasteland and desert is its representative landscape. Water shortage limits its socialeconomical development and environment protection. The paper systematically analyzed characteristics of water resources and ecological environment in Xinjiang，comprehensively evaluated the current situation of development and utilization of water resources，and stated the main problems existed. The following issues are important challenges to influence sustainable development in Xinjiang: rational allocation of water resources，climate change，suitability and controllability in the development process of ecological environment，dams and ecological protection of rivers，development & utilization and protection of ground water resources，problems related to ecological environment，problems related to water resources in arid areas，and construction of a cyclic economy system. Detailed methods and counter measurements were suggested of tackling problems. The total runoff in Xinjiang is 87.9 billion cube meters，which means only the water depth of 53mm per square meter. Moreover，the distribution of water resources is very uneven，not only between areas，but also within a year. The following three measures will help to solve some problems. First，construction of water delivery projects among basins will probably realize the rational allocation of water resources macroscopically throughout Xinjiang. Second，engineering measures and their optimized combination，such as building reservoirs in mountain areas and canal heads，rehabilitation of irrigation zones，combined regulation of surface water and ground water，and drainage control，will probably realize the effective regulation and control of water resources within a basin. Finally，adjustment and control of buildings，watersaving social construction，water requirement management，multiresources allocation along with their strict management will probably realize the effective utilization of water resources in a small scope such as a city.