As the most important production space for the development of chemical industry in China, chemical industrial parks (CIPs) are facing a new challenge of water pollution prevention and control, in addition to those posed by traditional and emerging pollutants. It is thus important to systematically reveal the compositewater‐environmental impact of CIPs for contributing to the sustainable development of the chemical industry. CIPs have the issue of intensive wastewater generation characterized by complex pollutant components and high pollution loads. Thus, establishing an environmentally friendly wastewater treatment system has always been a major challenge for CIPs. China has developed many CIPs and the two‐stage wastewater treatment system is widely employed in practice, that is, in‐plant wastewater treatment plants (WWTPs) in individual enterprises followed by centralized WWTPs in parks. Since the CIP wastewater emission limits are continuously improved, a comprehensive evaluation of the environmental impacts of the in‐use wastewater treatment system will be insightful for future policy making. This study employed life cycle assessment (LCA) to reveal the life cycle environmental impact of the two‐stage wastewater treatment system in a typical CIP. We found that the life cycle environmental impacts of the whole system mainly stem from the in‐plant WWTPs of chemical manufacturers because of chemicals and electricity consumed in the multi‐stage advanced oxidation technologies, while the increase of human toxicity potential and marine aquatic ecotoxicity potential are primarily due to sludge incineration. Three scenarios targeting the reduction of environmental impacts were proposed based on the LCA results. We evaluated the pollution mitigation potential, which can reach at most 8% of the original measured impacts. Finally, from the perspective of systematic thinking, four policy implications for improving the water management system of CIPs were proposed.