Abstract: Oasis is one of the most important gathering areas for human survival and development in arid regions. The enclosed, isolated, fragile, and water-dependent of their natural space has led to an extremely intense degree of conflict, due to the competition among multiple functions. These spatial conflicts have seriously hindered the sustainable use of land resources and the coordinated development of human-land relationships in the oasis. This study aims to accurately identify the conflict situation, and then explore the mechanism of conflict generation, in order to optimize the territorial space pattern of the oasis. Conflict diagnosis and identification were constructed using functional competitiveness. A typical oasis was selected to identify the territorial spatial conflict in Ganzhou District in the middle reaches of the Heihe River. Moreover, some strategies were proposed for conflict regulation, according to the interaction mechanism of conflict generation. The results showed that: 1) The competitiveness of agricultural function was characterized by the high level in the interior of the oasis and the low level in the periphery. The high competitiveness was distributed in a patchy form in the plain area of the oasis and the alluvial-proluvial fan zone at the foot of the mountains; The high competitiveness of urban function was distributed mainly in the central urban area, industrial parks, and key towns, such as Xindun and Liangjiadun counties; The ecological function was characterized by the high-level competitiveness in the southeast of the oasis and the low level in the north. The high competitiveness is distributed with the clustered and fragmented-patchy areas, such as the nature reserves, wetland parks, and state-owned forest farms. 2) The strong conflict was distributed mainly in the urban and agricultural space at the urban fringe, as well as the agricultural and ecological space at the edge of the oasis. The moderate conflict was scattered in the ecological and agricultural space in the oasis plain. The weak conflict was distributed in the Gobi Desert on the periphery of the oasis. Some conflicts occurred rarely in the areas of farmland protection, urban construction, and ecological protection. 3) The territorial spatial conflict in the oasis was generated to be jointly influenced by the endogenous driving force of natural resources, the exogenous driving force of socio-economy, and the decision-making regulatory force. The regulation was classified to be implemented, according to the scale of urban construction and agricultural development in the future. The supply and demand relationship of multiple functions can be balanced to intensify the ecological protection and restoration for intensive and efficient utilization. This finding can also provide a strong reference to prevent territorial spatial conflict in the oasis of the arid region.