Lake water eutrophication has become one of the most important factors impeding sustainable economic development in China. Knowledge of the current status of lake water eutrophication and determination of its mechanism are prerequisites to devising a sound solution to the problem. Based on reviewing the literature, this paper elaborates on the evolutional process and current state of shallow inland lake water eutrophication in China. The mechanism of lake water eutrophication is explored from nutrient sources. In light of the identified mechanism strategies are proposed to control and tackle lake water eutrophication. This review reveals that water eutrophication in most lakes was initiated in the 1980s when the national economy underwent rapid development. At present, the problem of water eutrophication is still serious, with frequent occurrence of damaging algal blooms, which have disrupted the normal supply of drinking water in shore cities. Each destructive bloom caused a direct economic loss valued at billions of yuan. Nonpoint pollution sources, namely, waste discharge from agricultural fields and nutrients released from floor deposits, are identified as the two major sources of nitrogen and phosphorus. Therefore, all control and rehabilitation measures of lake water eutrophication should target these nutrient sources. Biological measures are recommended to rehabilitate eutrophied lake waters and restore the lake ecosystem in order to bring the problem under control.