SUMMARY Reclaiming farmland from lakes in China in the 1950s damaged the water quality of many lakes. Tremendous efforts have been made since the late 1990s to restore vegetation around the damaged lakes. This paper examines water quality of Fuxian and Qilu Lakes and land-use characteristics within the two catchments in the high-altitude area of Yunnan Province, China. Landsat TM data acquired in 1989, 1994, 1999 and 2005 were used to extract land use and land cover (LULC) information. Measurements of five water quality indices (WQIs), BOD, COD, pH, TN and TP, for the same period of time were examined. The results showed that the area of residential and forest/shrub increased, whereas that of cropland and barren land decreased from 1989 to 2005 in both catchments. Qilu Lake was much more polluted than Fuxian Lake, and pollution worsened over time for both lakes. The differences in water quality between the two lakes were caused by differences in LULC composition and continued degradation in water quality was caused by intensive farming and urban sprawl. Unless the landscape is converted back to its pre-1950 composition and structure, water quality in both lakes cannot be significantly improved and will continue to threaten sustainable development in the region.