Due to frequent large earthquakes in the Lanping-Simao fault basin—located in China’s Yunnan Province—the Simao observation well has observed groundwater discharge, as well as Ca2+, Mg2+, and HCO3− concentrations every day between 2001–2018. Over 18 years of observations, M ≥ 5.6 earthquakes within a radius of 380 km from the well were seen to cause hydrochemical variations. In this study, we investigated CO2 release and groundwater mixing as possible causes of regional earthquake precursors, which were caused by the characteristics of the regional structure, lithology, water-rock reactions, and a GPS velocity field. Precursory signals due to CO2 injection are normally short-term changes that take two months. However, groundwater mixing linked to earthquakes was found to take, at the earliest, 15 months. The proportion of shallow water that contributes to mixing was found to significantly increase gradually with the stronger regional strain. These finding delineate the two mechanisms of earthquake-induced hydrochemical variations in an observation well, and would contribute to a better understanding of chemical changes before events in the Simao basin.