Groundwater plays a crucial role in the formation of the Badain Jaran Desert-Sand Dune Lake System, which has been designated a UNESCO World Heritage Site in 2024. However, the region's wetland ecosystem is significantly impacted by climate change and human activities. This study utilizes GRACE satellite data and in situ observation data to establish a groundwater storage anomaly (GWSA) time series for the Badain Jaran Desert and its surrounding areas (BJDCA) from 2003 to 2022. The analysis reveals the spatiotemporal patterns of groundwater drought and sustainability, as well as the underlying factors affecting regional groundwater sustainability. The results indicate that 99.2% of the study area exhibited a significant decline in GWSA (alpha <= 0.01), with the annual mean GRACE Groundwater Drought Index (GGDI) dropping from 1.44 to -1.54, reflecting a worsening groundwater drought. In 2022, the GGDI in the southeastern part of the BJDCA reached as low as -3.04, highlighting severe groundwater stress. Furthermore, the Sustainability Index (SI) of the study area declined markedly from 1.00 to 0.01, underscoring the critical impact of human activities on groundwater resources in the BJDCA. These findings provide valuable insights for formulating more effective groundwater resource management policies and promoting sustainable development in arid regions.