The Badain Jaran desert in western Inner Mongolia in China has a unique landscape that contains 72 lakes, with a total water surface area of 23 km2, and the world's highest stationary sand dunes, which are up to 500 m tall--despite the prevailing dry and windy weather conditions. Here we present evidence of a major groundwater system that underpins the factors leading to this landscape. Our finding could transform plans for the region's water resources.