The urbanization process is complex and lengthy, typically bringing dual changes in the socioeconomic structure and ecological environment. However, facing the arid environment and the initial urbanization, emerging towns will undergo an evolutionary process vastly different from traditional cities. This paper takes the example of a typical town, exploring the growth process under the overlapping background of arid conditions and early urbanization. The results show that the initial urbanization of towns in the hinterland of southern Xinjiang has the following characteristics: from refined agricultural planting to shrubs and bare land dominated by natural factors, and then to impervious surfaces. The pattern was complex but the transition direction was clear. Using the town establishment in 2014 as a key node, shrubland emerged as the most sensitive land type of urbanization, with a proportional increase of 142.8% from 2010 to 2015. During this period, 78% of shrubland was transferred from cropland. When analyzing the annual water yield of the town and its surrounding area, it was found that urbanization primarily manifested as increased instability in the water yield of the surrounding region. A detailed study of emerging urbanization in arid areas is crucial to prevent potential urban issues in the future and promote the healthy development of small and medium-sized towns.