Oases are major foci of human activities in arid regions. Research on the interactions between past climate change, oasis evolution, and human activities may provide an important historical frame of reference for evaluating current and future societal responses to global climate changes. Here, we use optically stimulated luminescence (OSL) and radiocarbon (14C) dating of a sedimentary sequence, combined with analyses of various environmental proxies, to reconstruct the environmental evolution of the Baiyang River Basin, northwest China, during the middle to late Holocene. Additionally, we use a compilation of radiocarbon-dated archaeological sites from the Bronze Age to the historical period to construct a timeline of human activity in the study area. The results show that a flourishing oasis environments were concentrated during the periods of 4.14–2.41 ka BP and after 1.68 ka BP, which corresponded to increases in human settlements during the Bronze Age and after the Tang Dynasty, respectively. By contrast, increased environmental instability during 5.71–4.14 ka BP and 2.41–1.68 ka BP may have hindered human settlement in this area, and the 14C dates show that human activity in the Baiyang River Basin was reduced during those periods. A comparison with regional paleoclimatic records revealed that the evolution of oases was closely related to changes in temperature and precipitation. Higher temperatures in the middle Holocene (∼6–4 ka) caused increases in glacier meltwater production and river discharge, which resulted in a more hydrogenic environment in the downstream oases. Increased humidity in the area during the late Holocene resulted in the re-emergence of oases and therefore of human settlements. Our findings highlight the important relationship between human settlement and land surface processes. We suggest that future warming may cause increased meltwater production and extreme precipitation events, which could adversely impact human societies in arid regions due to more frequent flooding in the downstream oases.