Taking a river watershed as a unit to regulate socio-economic development and environmental protection, is an effective way to achieve sustainable development. And therefore it is unfolding to carry out a study of the interaction between the socio-economic development and the changes in the water environment in a river watershed. Using multiple linear regression analysis, selecting socio-economic indicators (the primary industry GDP, the secondary industry GDP, the end of the total population of one year) as the independent variable, water quality indicators (concentration of COD_Mn and NH₃-N) as the dependent variable, quantitative research of the relationship between the socio-economic development and water environment was carried out from 2001 to 2010 in Liaohe River watershed. And the environmental Kuznets curve was simulated by taking water environment indicators (concentration of COD_Mn and NH₃-N) and economic growth indicators (per capita GDP) as indicators. And the results showed that the secondary industry GDP, population are important factors to affect the changes of the concentration of COD_Mn, and there are many factors to influence NH₃-N concentration. And relationship curve between the economic growth and water environment is not fully consistent with the typical Kuznets Curve in Liaohe River Watershed. Accompanied rapid economic growth, industrial point source pollution discharge control should carry out, and agricultural nonpoint source pollution control efforts should be strengthened at the same time.