As energy and water are fundamentally intertwined, understanding the spatial and temporal evolution of thermoelectric water use and water stress is important for both sustainable energy development and water resource management. Here we compile high-resolution time-series (2000–2015) of water withdrawal and consumption inventories for China’s thermoelectric power sector to identify the driving forces behind changing water use patterns, and reveal the spatial distribution of thermoelectric water stress. We show that freshwater withdrawal has been decoupled from thermoelectric power generation growth at the national level due to the increased adoption of air-cooling and seawater-cooling technologies and advanced large generating units as well as water use efficiency improvements in this period. Nevertheless, the construction of large coal-fired power generation hubs has increased water stress in many arid and water-scarce catchments in northwestern regions of China. The westward development of the power industry necessitates water-withdrawal caps and the integration of water risk analysis into energy planning.