The water-quality index is a grading system for presenting water-quality data and comparing water of varying quality. It can be used in water quality trend analyses and presents valuable information to policy makers, managers, and other nontechnical people. For exploring water quality and identifying the main pollution parameter in the lower reaches of Liao River, Single Factor Evaluation (SFE) method in the form of a Comprehensive Water Pollution Index (CWPI), the Nemerow-Sumitomo Water Quality Index (NWQI), and the Comprehensive Water Quality Identification Index (CWQII) method were used to evaluate water quality in lower reaches of Liao River, Liaoning province, China. The results proved that at Zhaoquan river and Wailiao river the water quality status was good, and Pangxiegou river and Qingshui river showed unsatisfactory water quality status. The major pollution indicator in lower reaches of Liao River was petroleum, and compared with the other assessment methods, CWQII was found to give more useful and objective information, and it is worth further promoting water quality inspections in lower reaches of Liao River. Finally, according to the distribution of industry in the Liao river basin, this study makes some relevant suggestions for sustainable development in the future.