This study investigates the degradation process of mountain wetlands in the upper Hanjiang River Basin (HRB) over a 30-year span from 1990 to 2020. In particular, the landscape development intensity (LDI) index was employed to conduct a comprehensive assessment of the wetland health. This was subsequently combined with the spatio-temporal changes of water quality in the basin to explore the potential correlations between the health status of mountain wetlands and the associated watershed water quality. The results show that over the past three decades, wetland ecosystems have shrunk by 18% due to conversion into farmland, grass, construction land and forest land. This was significant between 2010 and 2020, as shown by a land use dynamic index of −1.121% during 2010–2020, which was significantly higher than that in the preceding two decades (0.003%, 0.367%) (p < 0.05). LDI values for individual sub-watersheds across different years ranged from 2.39 to 4.93, demonstrating an increasing trend since 2010. This indicates a heightened level of human interference in mountain wetlands. Although the water quality within the basin generally adhered to the Class II surface water quality standard, total nitrogen (TN) (primarily from farming) was a concern. Areas with relatively more human activity were observed to exhibit increased pollution levels, as demonstrated by a positive correlation between LDI and the concentrations of total phosphorus (TP), ammonium nitrogen (NH4+-N), and chemical oxygen demand (COD) in the basin. The LDI of the mountain wetland exhibited a consistent positive correlation with the water quality comprehensive function, both during the flood (r = 0.77–0.81) and non-flood (r = 0.61–0.70) seasons (p < 0.05). This indicates the significant impact of the wetland landscape structure on the water quality within a 1000 m radius on either side of the river. Special attention should be paid to the management and allocation of wetland landscapes within this 1000 m buffer zone. Furthermore, efforts to control upstream pollutant emission should be strengthened.