The area reduction, water pollution and ecosystem function degradation of urban lakes have threatened the city's health and development. Monitoring the spatio-temporal evolution of urban lakes and its impact on the ecosystem service values can help promote the perception of lake protection and provide informative data for using the lake resources in a sustainable way. It is of great significance to maintain the stability and health of urban lake ecosystem. In this study, lake distribution information was derived from the Landsat images acquired on September 26, 1987, October 4, 1996, July 31, 2007 and July 23, 2016 in Wuhan urbanized area to investigate the spatio-temporal dynamic of urban lakes and its main driving forces. Based on the varied natural, social and economic conditions in the study area, the ecosystem service values of urban lakes in different studied years were estimated accordingly. The dynamic responses of urban lake ecosystem service values to lake environment variations and human activities were also discussed. The results indicated that:(1) the lake extent in Wuhan urbanized area shrank from 143.9 km² in 1987 to 61.9 km² in 2016, with the decrease of 56.9%. Those lakes with smaller size and shorter distance to the city core were found to be occupied more significantly. Thus, the criss-crossing lake network in 1987 was divided into separate patches in 2016. (2) Human activities such as agricultural production and urban construction were found to be responsible for the majority of the lake area reduction. The implementation of lake protection measures resulted in the lake area increase. While the specific driving factors varied during the studied period. (3) Due to the lake area reduction and water quality deterioration, the lake ecosystem service value reduced from 2.095 billion Yuan in 1987 to 0.678 billion Yuan in 2016, a decrease of 67.64%. (4) The flood storage had the maximum annual value in all ecological functions, followed by waste treatment, water retention, habitats provisioning, entertainment, scientific research, climate regulation, carbon sequestration, oxygen generation, and dust interception. Urban lakes had irreplaceable advantages due to the huge economic values in flood storage, waste treatment and water retention.