This paper analyzes the water resource degradation trend in Xinjiang in 2004 to 2014 from perspective of grey water footprint, and uses decoupling index to study their coordinated degree between economy and water resource environment and discusses the causes of water resource degradation from industrial perspective. In 2004 to 2014, grey water footprint rose with a worsening water resource degradation trend, indicating a preliminary coordination between its economy and water resource environment, most contributed by expanded agricultural production. This paper presents suggestions on adjusting industrial structure, freeing overdependence of social development upon agriculture, and focusing on water supply controls and pollution prevention during industrial transformation, so as to prevent water resource degradation and to reach a sustainable development in Xinjiang.