Land use change is widely regarded as a key factor altering the structure and function of ecosystems. Urbanization is a particular driver and influence in land use change and is expanding globally, especially in developing countries like China. The InVEST model was employed in this study to comprehensively assess the temporal-spatial impacts of urban land use changes (ULUC) on ecosystem services (ESs) and clarify the tradeoffs between urbanization and ecosystem services provision (ESP) in Dianchi Lake Basin (DLB), China, during 1995–2015. The results showed that DLB’s constructed land, particularly in lakeside areas, has increased substantially because of rapid urbanization (built-up area increase 51%, urbanization rate increase 91%), at the expense of agriculture, grassland, and scrubland, greatly altering ESP. Compared with 1995, carbon storage in 2015 decreased, while soil retention and nitrogen exports only fluctuated slightly. Although water yield increased, the ecological water volume of the whole DLB decreased through an increase in regional surface runoff. This resulted in more pollutants being carried into Dianchi Lake, impairing water quality and causing serious ecological and environmental issues. Thus, this study provides empirical evidence of the significant influence of ULUC on ESP. For eco-friendly urbanization in DLB and similar areas with rapid urbanization, a sustainable pattern of urbanization should be followed. The best tradeoffs between urbanization and ESP should be identified and considered in decision-making relating to urban planning, land use management, optimal natural resources management, and ecological conservation.