The contamination of sediments by toxic metals poses a significant threat to both river ecosystems and human health. In this study, the geo-accumulation index (Igeo), biotoxicity evaluation method, and potential ecological risk index (RI) were employed to analyze the contamination level, biotoxicity risk, and potential ecological risk of toxic metals in surface sediments of the Xiaoqing River. To identify toxic metal sources, Spearman correlation and principal component analysis with multiple linear regression analysis (PCA−MLR) were employed. Additionally, redundancy analysis (RDA) was utilized to investigate potential driving factors affecting toxic metal accumulation in sediments. The results revealed that the levels of the five investigated metals (Cr, Pb, As, Hg, and Cd) showed constant fluctuations during the period 1996–2020. The midstream was found to be more polluted than the upstream and downstream. In the research area, Hg was identified as the primary contaminant with high levels of contamination, posing a biotoxicity risk and potential ecological risk. Pollution sources were identified for two periods: A (1996–2010) and B (2011–2020), with industrial, agricultural, traffic, and natural sources being the main contributors. During period A, industrial sources accounted for the highest proportion (40.8%), followed by agricultural sources (36.6%), and geological natural sources (22.6%). During period B, agricultural sources accounted for the highest proportion (42%), followed by industrial and traffic sources (32.4%), and geological natural sources (25.6%). The distribution of toxic metals in the basin was significantly influenced by water pH, sediment organic matter, population density, and per capita GDP. The study results provide fundamental data for preventing pollution and managing water resources contaminated with toxic metals in the sediments of the Xiaoqing River in Jinan. Additionally, it serves as a reference for analyzing related ecological and environmental issues in the basin.