With growing water scarcity and water quality deterioration, water resource assessment has become a major focus of researchin many areas of the world. Understanding water consumption and its structure is essential for assessing a city’s ability toachieve sustainable water resource utilisation. Based on the concept of the water footprint (WFP), we quantified direct andindirect water consumption in various sectors and used a water stress index (WSI) and water self-sufficiency (WSS) toevaluate the sustainability of water resource use in Lijiang City. The results showed that the WFP of the city in 2008 was995 Mm3, and that the average WFP per capita was 815 m3, with a WSI of 8.36% and WSS of 100%. Agricultural wateruse was responsible for 93% of total local water consumption, with 62% for crops and 38% for animals. Lijiang City willface little stress from water resource use in the short term; however, its water use efficiency is relatively low, and the currentwater resource use is unsustainable in the long term. We recommend the assessment of direct and indirect water use as anecessary step in developing effective water management policies.