Over recent decades, the hilly and gully regions of the northern Loess Plateau in Shaanxi province have grappled with severe soil erosion and a precarious ecological milieu. Shaped by urbanization policies, this locale has encountered a gamut of issues, including an imbalance in human–environment dynamics and the degradation of ecological integrity. Consequently, the comprehension of how urban expansion impacts the optimization of regional landscape configurations, the alignment of human–environment interactions in the Loess Plateau’s hilly and gully domains, and the mitigation of urban ecological challenges assumes paramount importance. Leveraging data from land use remote sensing monitoring, alongside inputs from natural geography and socio-economic spheres, and employing methodologies such as landscape pattern indices, we conduct an exhaustive analysis of Zichang City’s urban fabric from 1980 to 2020. Furthermore, employing the CLUE-S model, we undertake multifaceted scenario simulations to forecast urban expansion in Zichang City through to 2035. Our findings delineate two distinct phases in Zichang City’s urban expansion trajectory over the past four decades. From 1980 to 2000, urban construction land in Zichang City experienced a phase of methodical and steady growth, augmenting by 64.98 hectares, alongside a marginal decrease in the landscape shape index (LSI) by 0.02 and a commensurate increase in the aggregation index (AI) by 1.17. Conversely, from 2000 to 2020, urban construction land in Zichang City witnessed an epoch of rapid and haphazard expansion, doubling in expanse, marked by a notable escalation in LSI (2.45) and a corresponding descent in the AI (2.85). The precision of CLUE-S model simulations for Zichang City’s land use alterations registers at 0.88, fulfilling the exigent demand for further urban expansion and land use change prognostication. Under the aegis of the natural development scenario, the augmentation of urban construction land in Zichang City primarily encroaches upon grassland, farmland, and woodland, effectuating an increase of 159.81 hectares. Conversely, under the ambit of urbanization development, urban construction land contends predominantly with farmland, grassland, and woodland, heralding an augmentation of 520.42 hectares. Lastly, under the mantle of ecological protection, urban construction land expansion predominantly encroaches upon grassland, farmland, and woodland, resulting in an augmentation of 4.27 hectares. Through a nuanced analysis of the spatiotemporal evolution of urban expansion and scenario-based simulations, this study endeavors to furnish multi-faceted, scenario-driven, and policy-centric insights for regional planning, urban spatial delineation, and regional ecological safeguarding.