The growing urbanization of oasis cities in arid and semi-arid regions of Northwest China has an adverse influence on the fragile local ecological system. Therefore, improved understanding of the coupling and coordination between urban expansion (UE) and ecosystem services value (ESv) is critical to long term sustainable development. Here, we study the urbanization trend of a typical oasis city of Northwest China (Kashgar) using Landsat TM/ETM+/OLI imagery from 1990 to 2015. Land use types are classified and the spatio-temporal features of UE are analyzed; ESv of each land use types and the ecosystem services function (ESf) are determined; the driving factors of UE and the spatio-temporal change of ESv are analyzed; and the coupling and coordination relationship between UE and ESv is quantitatively determined. Results show that: (1) The land use structure has changed significantly between 1990 and 2015, with construction land (40.51 km2) showing the highest growth and farmland (28.42 km2). (2) UE values during 2000–2005 (16.65 km2) and 2010–2015 (21.09 km2) are relatively large, and during 1990–2015, the city extended from the center to the outskirts at a dynamic growth rate of 13.17% and a comprehensive expansion index of 1.54‰. (3) The total ESv was reduced by CNY 35.76 million (USD ~ 5.26 million), ranked from high to low as: waste treatment (CNY 9.94 million, USD ~1.46 million), water source conservation (CNY 7.95 million, USD ~ 1.17 million), soil formation (CNY 4.60 million, USD ~ 0.68 million), biodiversity protection (CNY 3.37 million, USD ~ 0.5 million), climate regulation (CNY 3.15 million, USD ~ 0.46 million), food production (CNY 2.83 million, USD ~ 0.42 million), gas regulation (CNY 1.96 million, USD ~ 0.29 million), entertainment and leisure (CNY 1.26 million, USD ~ 0.19 million), and raw materials (CNY 0.68 million, USD ~ 0.1 million). (4) The coupling degree between UE and ESv is relatively small (<0.5), though this value has increased yearly. The coordination degree between UE and ESv is relatively low, indicating that UE already poses a serious danger to the ecological environment. (5) The rapid growth of the population and economy and government policies are the main driving factors of intensive UE. Increasing climatic factors such as precipitation, temperature, and runoff impact ESv in some positive ways whereas UE leads to a reduction of ESv. Our results here can help to guide long-term sustainable development of arid regions, reasonable urban planning of oasis cities, and protection of the local ecological environment.