Some wastewater sources, such as agricultural waste and runoff, and industrial sewage, can degrade water quality. This study summarises the sources and corresponding mechanisms that trigger eutrophication in lakes. Additionally, the trophic status index and water quality index (WQI) which are effective tools for evaluating the degree of eutrophication of lakes, have been discussed. This study also explores the main nutrients (nitrogen and phosphorus) driving transformations in the water body and sediment. Lake Erhai was used as a case study, and it was found to be in a mesotrophic state, with N and P co-limitation before 2006, and only P limitation since 2006. Finally, effective measures to maintain sustainable development in the watershed are proposed, along with a framework for an early warning system adopting the latest technologies (geographic information systems (GIS), remote sensing (RS)) for preventing eutrophication.