Groundwater resource is crucial for the development of agriculture and urban communities in valley basins of arid and semiarid regions. This research investigated the groundwater chemistry of a typical urbanized valley basin on the Tibetan Plateau to understand the hydrochemical status, quality, and controlling mechanisms of groundwater in arid urbanized valley basins. The results show groundwater is predominantly fresh and slightly alkaline across the basin, with approximately 54.17% of HCO3-Ca type. About 12.5% and 33.33% of sampled groundwaters are with the hydrochemical facies of Cl-Mg·Ca type and Cl-Na type, respectively. Groundwater is found with the maximum TDS, NO3−, NO2−, and F− content of 3066 mg/L, 69.33 mg/L, 0.04 mg/L, and 3.12 mg/L, respectively. Groundwater quality is suitable for domestic usage at all sampling sites based on EWQI assessment but should avoid direct drinking at some sporadic sites in the urban area. The exceeding nitrogen and fluoride contaminants would pose potential health hazards to local residents, but high risks only existed for infants. Both minors and adults are at medium risk of these exceedingly toxic contaminants. Groundwater quality of predominant sites in the basin is suitable for long-term irrigation according to the single indicator of EC, SAR, %Na, RSC, KR, PI, and PS and integrated irrigation quality assessment of USSL, Wilcox, and Doneen diagram assessment. But sodium hazard, alkalinity hazard, and permeability problem should be a concern in the middle-lower stream areas. Groundwater chemistry in the basin is predominantly governed by water-rock interaction (silicate dissolution) across the basin in natural and sporadically by evaporation. Human activities have posed disturbances to groundwater chemistry and inputted nitrogen, fluoride, and salinity into groundwater. The elevated nitrogen contaminants in groundwater are from both agricultural activities and municipal sewage. While the elevated fluoride and salinity in groundwater are only associated with municipal sewage. It is imperative to address the potential anthropogenic contaminants to safeguard groundwater resources from the adverse external impacts of human settlements within these urbanized valley basins.