Sustainable management of multi-layer aquifer systems in arid regions is challenged by vertical leakage induced by intensive groundwater extraction. In the Yinchuan Plain, northwest China, prolonged pumping has formed large depression cones (>500 km(2)) in the confined aquifer, enhancing leakage from the phreatic aquifer. This study integrates hydrochemical and isotopic analyses to elucidate the mechanisms and spatial heterogeneity through which such leakage impacts confined water quality. Results showed that the mean Total Dissolved Solids (TDS) in confined water increased from 1008 mg/L in 2003 to 1795 mg/L in 2021, though remaining lower than that in phreatic water (1557-2806 mg/L). The leakage recharge volume increased from 6.3 x 10(8) to 7.4 x 10(8) m(3) during this period, driven by an increased hydraulic gradient. Spatially, leakage intensity was highest in Shizuishan due to expanding over-exploitation, with phreatic water contributing 71.7-96.1 % to confined water, significantly higher than other areas (<30 %). In contrast, reduced extraction in the central region (Yinchuan) mitigated hydraulic gradients and leakage, demonstrating the potential for management interventions. Additionally, 23.4-57.3 % of confined water samples exceeded permissible limits for NH4-N. Isotopic evidence (delta N-15-NH4: -6.38 parts per thousand-16.56 parts per thousand) and MixSIAR modeling indicated that ammonium fertilizers contributed 66.7 % of NH4-N. The combined influence of high fertilizer application, flood irrigation, and reducing conditions accelerated the nitrogen migration via enhanced vertical leakage. These findings demonstrate that phreatic aquifer leakage is the dominant pathway for confined water quality degradation, highlighting the vulnerability of confined aquifers to shallow contamination under intensive exploitation. This study provides a scientific basis for targeted groundwater resource protection strategies in arid regions.