Abstract: Water resources shortage is always being a “bottle-neck” in the process of sustainable development of economy，society and ecological aspect in arid areas of northwest China. It will be significant and important in accelerating the process of urbanization and sustainable use of water resources by quantificational analyzing the interaction，coupling mechanism and evolution rule between water resources system and urbanization system. Taking Shiyang River basin，Gansu Province，China，a typical arid inland river basin as the research object including the two major administrative districts：Jinchang City and Wuwei City as an example here. The concept and calculation model of coupling about water resource-urbanization compound system are put forward according to the Grey Correlation Degree，Water Resources Constraint Intensity，and the Gap between actual development level and high quality development. In addition，the evaluation index of coupling degree and the grading standard of each evaluation factors are established. The model is characterized with high practicability and maneuverability as well as clear index significance. According to the result，the water resources carrying capacity of Wuwei and Jinchang cities in Shiyang River Basin is being in a quasi-overloading state，which varied between 0.22-0.26 from 2001 and 2010 and declined year by year. The urbanization process and water carrying capacity are in a primary association with an average annual growth rate of Grey Correlation Degree of -4.28% and -3.53%，respectively. The coupling degree between water resources and urbanization compound system was greater than 0.6，belonging to extreme restraint and the restraint degrees showed a slightly declining trend when the restraint degree was less than 0.6. It slightly increases from recession phase to the primary coordination phase with an average annual growth rate of 2.01% and 0.96%，respectively.  Due to the serious problems such as serious water resources shortage，irrational water utilization structure，higher degree of the water development and inefficient use of the water resource，the decoupling degrees between the water resources-urbanization compound system ranged from primary coupling state to antagonistic state，thus water resources constitute a very strong constraint on the city development in the study area. By comparing the present status and utilization of water resources of the study area with the Middle East country Israel with drought climate and severe water scarcity，it is considered that the water resources carrying capacity in Shiyang River Basin still has an exploitation potential. The advanced water-saving technique and anagement experience of Israel are advocated and put forward in the paper in order to adopt them to the arid areas in northwest China.

Key words: water carrying capacity, urbanization level, compound system, coupling effect, arid inland river basin of northwest China