Lakes are important water reservoirs that play an important role in water supply and climate regulation, especially in arid regions. A large number of lakes are distributed across the Hulun Buir grasslands, which account for as high as 58% of the total area of lakes in Inner Mongolia, China. Subjected to significant climate change and intensive anthropogenic activities, lakes in the Hulun Buir grasslands have shrunk significantly. Shrinkage of the lakes in this region may accelerate grassland degradation and reduce the lakes’ ecosystem services. However, long-term changes in the number and area of these lakes, especially the small ones (<1 km²), are poorly understood. Using the Landsat data (TM, ETM+, and OLI), in this study, we assess the changes in the number and area of lakes and their drives in Hulun Buir between 1986 and 2017. The assessment especially focuses on small lakes because they are more sensitive to environmental changes and have more widespread influences on livestock production compared to large lakes. We first used Google Earth Engine to analyze the Landsat surface reflectance data and extract the water body coverage of the lakes based on the normalized differential water index. Then, we explored the changes in the lakes and their possible driving forces over the past three decades. The results showed a significant shrinkage in the lake area during the last three decades with the most dramatic change occurring in small lakes. Specifically, the number and area of small and large lakes showed a significant decrease, whereas the decline in the area of medium-sized lakes was insignificant. The temporal change in the area of the lakes was nonlinear, showing an increase before 2000 and a decrease after 2000. A correlation analysis of the regional changes in the lake area with climatic factors (temperature, precipitation, and potential evapotranspiration) and human factors (grazing, mining, and irrigation) indicated that the areal shrinkage of small lakes was mainly due to an increase in the cropland area and water consumption by irrigation and that the impacts of climate change is relatively minor. The decrease in the area of large lakes was mainly caused by water consumption because of coal mining. In addition, the warmer and drier climate contributes to the shrinkage in the lakes’ area. Due to an increase in the area of agricultural land and exploitation of groundwater for coal mining, water consumption in this region stayed at a high level. The findings of this study recommend the optimization of industrial structure, upgrading of irrigation systems, and improvement of coal mining technology to protect lakes from further shrinkage and achieve a sustainable supply of water resources.