The interactions among industrial development, land use/cover change (LUCC), and environmental effects in Changshu in the eastern coastal China were analyzed using high-resolution Landsat TM data in 1990, 1995, 2000, and 2006, socio-economic data and water environmental quality monitoring data from research institutes and governmental departments. Three phases of industrial development in Changshu were examined (i.e., the three periods of 1990 to 1995, 1995 to 2000, and 2000 to 2006). Besides industrial development and rapid urbanization, land use/cover in Changshu had changed drastically from 1990 to 2006. This change was characterized by major replacements of farmland by urban and rural settlements, artificial ponds, forested and constructed land. Industrialization, urbanization, agricultural structure adjustment, and rural housing construction were the major socio-economic driving forces of LUCC in Changshu. In addition, the annual value of ecosystem services in Changshu decreased slightly during 1990–2000, but increased significantly during 2000–2006. Nevertheless, the local environmental quality in Changshu, especially in rural areas, has not yet been improved significantly. Thus, this paper suggests an increased attention to fully realize the role of land supply in adjustment of environment-friendly industrial structure and urban-rural spatial restructuring, and translating the land management and environmental protection policies into an optimized industrial distribution and land-use pattern.