Groundwater contamination by arsenic (As) is a major health/environmental concern due to its high toxicity to humans. Despite substantial research, there is scarce data in many countries regarding spatial distribution and As levels in groundwater, as well as its possible accumulation in humans/animals and associated health hazards. In this study, a total of 124 drinking water, 20 animal milk, 21 human hair, and 14 human nail samples were collected and analyzed for As contents from four tehsils (Bahawalnagar, Chishtian, Haroonabad and Minchinabad) of District Bahawalnagar. Geostatistical analysis and risk assessment models were used to predict the spatial distributions and health hazards of As in drinking water. Arsenic groundwater contents ranged between below detection limit (BDL) to 31.5 μg.L−1 with a mean of 7.6 μg.L−1. About 6 water samples (5%) contained As level > World Health Organization (WHO) limit. All these samples containing As contents > WHO limit were collected from Chishtian tehsil. In the case of milk samples, mean As contents were 75 μg.L−1 with a range of 42–111 μg.L−1. Arsenic was also detected in human hair (mean value of 640 μg kg−1 and range 71–2139 μg kg−1). However, As contents were BDL for all the nail samples. Risk assessment indices (cancer risk and hazard quotient) revealed possible health hazards due to their high values (3.0 and 0.0013, respectively). The principal component analysis (PCA) revealed that the potential sources of As release in the groundwater of study area do not match with those of other water variables. Hence, there is a need to monitor the groundwater quality of the Chishtian tehsil for any potential negative health impacts, as well as the possible sources of As in the groundwater of the study area.