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Northwest China is strategically crucial for China’s economic development, social stability, and national defense security. However, the shortage of water resources and its fragile ecological environment have been hindering local economic development and life quality improvement for local residents. In this study, we analyze the characteristics of agricultural production and trade in Northwest China from 2000 to 2018 from the perspective of water footprint and virtual water, and clarifies the impact of virtual water flow on local water resources. Research shows that the water footprint regarding crop production in Northwest China showed a fluctuating upward trend from 2000 to 2018. The outflow scale of virtual water gradually increases alongside with the transfer-out of fruits and cotton. The outflow of virtual water regarding fruits and cotton in Northwest China was 3.212 × 1011 m3 in 2018, accounting for 69.8 % of the total water footprint regarding crop production. The Yellow River Basin is the primary inflow area of virtual water from Northwest China, and the region northwest to the “Qice line” is the primary outflow area of virtual water. Water shortage is severe in Northwest China and fruit and cotton are planted for trade to drive economic growth. Therefore, optimizing the crop planting and virtual water trade structures and encouraging inter-basin water transfer are key measures to regulate physical–virtual water cycle, alleviate the contradiction between water supply and demand, and ensure regional water security.