Abstract: Effective utilization of water resources is an important strategic issue for economic and social sustainable development of the arid areas of Northwest China. The method of data envelopment analysis with undesirable output was used to analyze water use efficiency (ETE) of the arid areas in Northwest China in the period from 2004 to 2015, and compared it with the water resource utilization efficiency obtained with the method without undesirable output (TE). It was found that ETE was significantly lower than TE in value, indicating that the traditional water use efficiency determination method tends to overestimate the efficiency. From the point of view of time evolution, the water utilization efficiency was increasing rapidly from 2004 to 2015, but distributed unevenly in the arid region of Shaanxi, Qinghai, Xinjiang, Gansu and Ningxia. It was close to the best frontier in Shaanxi, Qinghai and Xinjiang, but rather low in Gansu and Ningxia. The convergence of water use efficiency of the five provinces was analyzed with the a-convergence method. It was found that the water resource utilization efficiency did not have any trend of convergence, but a trend of divergence, instead, which indicates that the discrepancies between the areas will further grow in the future. With the help of the Tobit model factors affecting the water resources utilization efficiency in Northwest China were analyzed, revealing that economic development level, industrial structure, urbanization level and water resource properties all have positive effects, but government intervention does a negative one on water resources utilization efficiency.