Water is crucial in generating granitic systems; however, its role (i.e., dehydration, low to high water-fluxed melting) in granitic magmatism in continental arcs remains unsettled and poorly understood. Neoproterozoic arc-related igneous rocks are uncovered along the western margin of the Yangtze Block, presenting a complex compositional array ideal for deciphering the influence of water content within the continental arc and its geodynamic significance. The Jinping granites, in the Ailaoshan zone, are emplaced at 750 ± 4 Ma, as determined by zircon U-Pb dating. These medium to coarse-grained granites consist predominantly of plagioclase, quartz, K-feldspar, muscovite, and biotite. Characterized by high SiO2 (71.2–73.5 wt%), alkalis (K2O+Na2O=7.54–9.56 wt%) and low Fe2O3T (1.01–1.66 wt%), MgO (0.53–0.85 wt%), and CaO (0.15–0.93 wt%) concentrations, they exhibit high-K calc-alkaline signatures. The negative correlation between P2O5 and SiO2, alongside the positive correlation between Rb and Y, typifies the Jinping granites as I-type granites. Low La/Nb (1.96–3.43) and Nb/Ta (8.57–11.3) ratios, but high Th/La (0.28–0.46) and Zr/Sm (30.5–47.7) ratios, as well as whole rock εNd(t) (−0.4 to +1.3) and zircon εHf(t) values (+5.25 to +8.53) of the studied granites are similar to synchronous mafic rocks at the western margin of the Yangtze Block. These features suggest partial melting origin from the mafic lower crust. Thermodynamic modeling posits that the Neoproterozoic Ailaoshan I-type granitic rocks may have formed through water-fluxed melting (2.0–3.5 wt% H2O) under medium pressure conditions (9 kbar). It is postulated that slab rollback could have prompted water (as hydrous melt or fluids) release from hydrous minerals in the underlying cumulate mafic rocks, subsequently triggering water-fluxed melting in the lower crust. In contrast, high water-fluxed melting-generated adakitic granites with low K2O/Na2O ratios (<0.8) in the region, spatially and temporally associated with the Jinping granites, reflect higher water content in the deeper crust. This supports the notion that water was conveyed from depths to surface, facilitating the conversion of adakitic rocks into I-type granites as water content diminished. Thus, water content within the lower crust plays a pivotal role in the genesis of granitic rocks with varied compositions in a continental arc setting.