Sustainability indices are a way of quantifying the progress that a certain region has achieved in terms of sustainability that can be transmitted to society and decision makers. The watershed approach has become relevant for managing water resources and ensuring their sustainability. This study combined the above two approaches by applying an adapted watershed sustainability index (WSI) to evaluate the sustainable development of the Santiago–Guadalajara River basin (SGRB), which passes through Guadalajara, the second-most populous city in Mexico. The river is the most polluted waterway in the country. The WSI of each sub-basin places the SGRB at a sustainability level between low in the upper and lower basin region and intermediate in the central basin region. Regions with a low sustainability level are characterized by environmental degradation due to changes in land use, while in the region with intermediate sustainability, the factor that most affect the evaluation is water availability. An overall sustainability score of WSI = 0.36 was obtained for the study area, which is lower than that of any other basins evaluated in the same manner around the world. These results send a clear message to decision makers of the three government levels, in charge of the environmental sustainability of the basin, of the need to take action to facilitate its recovery.