Urban waterbodies are one of the most pertinent issues involved in multiple aspects of Sustainable Development Goals (SDGs). However, waterbodies in large Chinese cities are highly vulnerable to urban-land expansion, which is mostly due to economic development, population growth, and rural-urban migration. In this work, we select 159 Chinese cities of over one million in population to investigate the encroachment on waterbodies due to rapid urbanization from 1990 to 2018. Overall, 20.6% of natural waterbody area was lost during this period to urban expansion, and this fraction varies from city to city and is related to waterbody abundance. With the acceleration of urbanization, waterbody occupation is becoming more serious (p < 0.01). However, in all cities, this encroachment has eased since 2010, which justifies the effective implementation of national-scale policies to conserve urban waterbodies. In the future, ecological resources, including waterbody, should be considered in urban planning to provide reasonable protection to waterbodies in the quest for urban sustainability.