Understanding the implications of dietary consumption and food trade for water resources is essential for sustainable development in water-scarce regions. In this study, we quantified the dietary virtual water use (DVWU) and trade flows associated with food production and consumption across the upstream, midstream, and downstream regions of the Yellow River Basin (YRB), with explicit consideration of urban-rural dietary differences. We then evaluated how virtual water transfers in the food trade affect regional water stress. The results revealed that, in 2020, grain-based diets accounted for 28.32% more DVWU than animal-based diets in the YRB. Upstream residents had the highest per capita DVWU (312.3 m3), primarily due to higher intake of water-intensive foods and feed. Rural diets were dominated by grain-based virtual water (60.64%), whereas urban diets relied more on animal sources (53.43%). The food trade led to a net outflow of 60.7 BCM of virtual water from the YRB, primarily from the downstream area, resulting in a 53.64% overall increase in the water stress index (WSI) across the basin. Although upstream regions experienced a 24% decrease in WSI due to virtual water inflow, downstream areas experienced an 80% increase, highlighting the spatial mismatch between food production and water availability. This study provides evidence-based insights for integrated food-water management and water-efficient food system planning in response to increasing water stress in the YRB and other arid regions of China.