Dianchi, the largest plateau lakes in China, has been seriously polluted due to heavy inputs of waste loads from the watershed. The lake becomes highly eutropic and algal blooms often take place in recent years. The Daqinghe River is a major tributary of Dianchi, which carries the wastes into the lake. It is therefore important to investigate the water quality dynamics and self-purification capacity of the outlet of Daqinghe River, so that efficiently control the wastes entering into the lake. This paper presents the analyses of physical, chemical and biological processes of self-purification through field observations and laboratory experiments. The study results can provide the parameters to the three-dimensional water quality model that is developed dedicatedly for this area and is to be presented in another paper about modelling. In addition, they can support the design of the aquatic environment restoration programs.