The healthy development of the urban water cycle requires the integrated consideration of natural and socioeconomic factors and is vital for sustainable regional socioeconomics. This study adopted Yinchuan City as a typical arid city in Northwest China and constructed a urban water cycle evaluation indicator system, considering the ecological status, environmental quality, abundance, and utilization of water. The analytic hierarchy process combined with the entropy method were used to determine the weights of the 15 indicators identified. The overall evaluation of the health of the water cycle in Yinchuan City from 2009 to 2017 was then conducted. The results indicated that the water cycle of Yinchuan City was in a sub-healthy state in 2009–2014, with a health score of 3.65~3.95. The water cycle was in a healthy state in 2015–2017, with a health score of 4.07~1.13, and the health score in 2015–2017 increased yearly. In addition, water utilization and water abundance were the main dimensions affecting the development of the health of the water cycle of Yinchuan City, and the indicators of their effects were per-capita water resource and drainage pipe density, respectively. Improving the health status of the water cycle of Yinchuan City will require increased rationality of the development and utilization of water resources and a reduction in water deficits. In turn, the health of the water cycle of Yinchuan City is expected to further improve.