The degradation of water environment (WE) has constrained the sustainable development of cities, while the rapid urbanization also exacerbates water environment change. However, the complicated relationship between urbanization and WE is far from clearly understood. In this study, a comprehensive index system for urbanization and WE was applied along with the System Index Evaluation Model (SIEM) and a Coupling Coordination Degree Model (CCDM) to analyze the coupling between urbanization and WE in Nanjing, East China, from 1990 to 2018. The comprehensive index of urbanization increased from 0.0392 in 1990 to 0.9890 in 2018, showing a clear increasing trend. Demographic and spatial urbanization made the largest contribution to urbanization development from 1990 to 2010, while economic urbanization became the largest contributor to urbanization development between 2011 and 2018. Under the combined effects of pressure, state, and response subsystems, the comprehensive WE index showed an upward trend with some fluctuations from 1990 to 2018. The degree of coupling coordination between urbanization and WE displayed an overall upward tendency, growing from 0.18 in 1990 to 0.95 in 2018. The coupling coordination state transitioned from a serious imbalance during the low coupling period (1990–1992) into the superior coordination of the highly coupled period (2011–2018). With the continuous urbanization in the future, in addition to ensuring the optimal management of surface water, protection of groundwater should be reinforced. The results advance our understanding of the dynamic relationship between urbanization and WE and provide important implications for urban planning and water resource protection.