A dynamic process like land use, if anthropogenically unsustainable, adversely affects the well-being of the land system. Worldwide, water bodies are facing imminent threat due to unsustainable anthropogenic activities. Water quality and ecology are the two characteristics of water bodies, if not preserved, shall have a direct consequence on the well-being of the human systems. Hence it is essential to understand the causes and consequences of the deteriorating water body systems. The condition is particularly grim in Himalayan water body ecosystems, where unplanned and unchecked urbanization has threatened their very existence. In the present study, the dynamics of land use/land cover (LULC) and its impact on the water quality of Dal Lake in Kashmir Himalaya, India has been assessed. We carried out a detailed study wherein changing LULC is analyzed against the deteriorating trophic status of the Dal Lake using time-series of satellite imagery of the lake’s catchment and its water quality data. Results indicated that the water quality of Dal Lake has remarkably deteriorated due to increased nutrient and sediment loads from the catchment, attributed to significant anthropogenic activities in the catchment. Due to unprecedented LULC changes in the catchment, the forest class shows a significantly negative change since the last four decades (1980–2018), corroborating with the ongoing deterioration of physicochemical characteristics of the lake. The analysis shows an increase in all the agents of eutrophication, such as NO3–N, TP, and COD, from 1990 to 2018. The decrease in forest, agriculture, and floating gardens was observed to show a significant negative correlation with the increase in the decadal average values of the COD, NO3–N, and TP for the same corresponding period. Similarly, a positive correlation was found between the increase in built-up, aquatic vegetation, bare surfaces, and these water quality parameters, establishing a strong relationship between the deteriorating condition of the lake and changing LULC. Our findings indicate that changing LULC of the lake’s catchment is one of the critical factors that has significantly contributed toward the deteriorating ecology and water quality of the Dal Lake. This study shall contribute toward the development of the robust conservation strategy in order to save this urban lake from its untimely death.