The problem of desertification in the Tarim Basin, an area with a unique geography and climatic conditions, has received extensive research attention not only in China but also around the world. Between natural factors and human activities, the latter are considered the main cause of desertification, with the excessive use of land resources accelerating its risk. This study classified the degree of desertification into five types, no, light, moderate, severe, and extremely severe desertification, and focused on the spatio-temporal changes in LULC, desertification development, and their relationship in the Circum-Tarim Basin during the period of 1990–2020, and the results indicated the following. (1) Over the 30-year study period, farmland development was frequent in the basin. The total farmland area increased significantly by 1.40 × 104 km2, which resulted from the occupation of grassland (mainly low-covered and medium-covered grassland) and unused land (mainly saline–alkali land). (2) There was a general alleviation of the effects of desertification, but also local deterioration. The area of no-desertification land has significantly increased (an increase of 2.10 × 104 km2), and the degree of desertification has shifted significantly to adjacent lighter degrees, but the area of extremely severe desertification in certain regions has increased (an increase of 7.89 × 104 km2). (3) There was an inseparable relationship between LULC and desertification. Oasisization and desertification were two processes that interacted and were interrelated. There was an approximately 54.42% increase in no-desertification land area mainly occurring in the region where LULC types changed (Region II), although this area only accounted for 9.71% of the total area of the basin. There was an approximately 98.28% increase in the area of extremely severe desertification occurring where there were no changes in LULC types (Region I). Region II demonstrated the best effects of desertification prevention and control in the 30-year study period in the Circum-Tarim Basin. Land development and oasis expansion have led to concentrated water use, resulting in water scarcity in certain areas, which cannot support the needs of vegetation growth, thus aggravating the degradation. Hence, “adapting measures to local conditions, rational planning, zoning policies, precise prevention and control” will be the way forward for desertification control in the future in the Circum-Tarim Basin.