Identifying phosphorus (P) sources and contributions from terrestrial sources is important for clean water and eutrophication management in lake watersheds. However, this remains challenging owing to the high complexity of P transport processes. The concentrations of different P fractions in the soils and sediments from Taihu Lake, a representative freshwater lake watershed, were obtained using sequential extraction procedure. The dissolved phosphate (PO4–P) and alkaline phosphatase activity (APA) in the lake's water were also surveyed. The results showed that different P pools in the soil and sediments displayed different ranges. Higher concentrations of P fractions were measured in the solid soils and sediments from the northern and western regions of the lake watershed, indicating a larger input of P from exogenous sources, including agriculture runoff and industrial effluent from the river. Generally, higher Fe–P and Ca–P concentrations of up to 399.5 and 481.4 mg/kg were detected in soils and lake sediments, respectively. Similarly, the lake's water had higher concentrations of PO4–P and APA in the northern region. A significant positive correlation was found between Fe–P in the soil and PO4–P concentrations in the water. Statistical analysis indicated that appropriately 68.75% P was retained in the sediment from terrigenous sources, and 31.25% P experienced dissolution and shifted to the solution phase in the water-sediment ecosystems. The dissolution and release in Fe–P in the soils were responsible for the increase of Ca–P in the sediment after the afflux of soils into the lake. These findings suggest that soil runoff predominantly controls P occurrence in lake sediments as an exogenous source. Generally, the strategy of reducing terrestrial inputs from agricultural soil discharge is still an important step in P management at the catchment scale of lakes.