A key issue in water resources management in China is the adoption of a total volume control framework of water supply at a regional level corresponding to socioeconomic development. This requires more efficient water demand management in order to achieve a balance between water supply and demand. The purpose of this paper is to conduct a thorough analysis of the water use structure of production sectors in order to identify the major impact factors and thus provide insights for demand management policy design. Taking Jiangsu Province as a case study, we compile a series of extended input-output (I-O) tables at a constant price and establish an I-O structural decomposition model. The major factors leading to change in water use by production sectors (primary, secondary and tertiary) in the Jiangsu Province during five time periods from 1997–2010 are categorized into structure effect, water use efficiency effect, and demand effect for each of three levels: (1) aggregated sectors, (2) sub-aggregated sectors, and (3) individual sectors. Within the study period, the demand effect consistently leads to an increase in water utilization and the increase effect becomes weaker over time, while the other two factors consistently lead to a decrease in water utilization and their dampening effect becomes stronger.