Rapid urbanization has increased the demand for more urban water resources, and water scarcity has limited the sustainable development of cities and regions. In this paper, all prefecture-level cities in Shandong Province in the lower Yellow River region are studied, an evaluation index system is established based on the water poverty index, and the improved entropy value method is applied to determine the index weights. At the same time, this paper explores the indicator correlations using Pearson correlation analysis and further explores the main obstacle factors for improving water security. This study intends to assess the current situation of water security in Shandong Province and provide suggestions for the sustainable improvement of water resources and sustainable economic and social development in Shandong Province. The results show that (1) from 2000 to 2020, the water poverty index at all levels in Shandong Province showed an upward trend, and the overall water security situation in the province improved significantly, with the overall five subsystem values of the WPI system climbing significantly. (2) Water supply pipeline density and landscape area ratio are strongly positively correlated. The centralized sewage treatment rate is strongly negatively correlated with the water consumption of 10,000 Yuan GDP and the water consumption of 10,000 Yuan industrial added value. (3) The low percentage of ecological water usage is the primary barrier preventing WPI improvement, according to calculations using the barrier level model. In addition, the high water consumption of GDP of 10,000 Yuan and industrial value added of 10,000 Yuan are factors affecting urban water security. The area should work to increase the rate at which its water resources are utilized, particularly the ratio at which industrial water is used repeatedly. It ought to give ecological water compensation greater consideration and utilize more ecological water overall.