The five northwestern provinces face numerous challenges in sustainable development, particularly water scarcity, economic imbalances, and ecological degradation. This study aims to deeply assess the region’s water resource conditions, the current status of economic development, and the health of the ecosystem while exploring the relationships and coupling mechanisms among them. Using the obstacle model, the research analyzes the primary barriers affecting these three significant factors in the region. The study further reveals a continually improving trend of coordinated development within the water–economic–ecological system in the five northwestern provinces of China, indicating that water usage per ten thousand GDP is the primary obstacle. This research enriches our understanding of the development in China’s five northwestern provinces and provides a theoretical foundation for achieving sustainable development.