Climate change and human activities have been heavily affecting oceanic and inland waters, and it is critical to have a comprehensive understanding of the aquatic optical properties of lakes. Since many key watercolor parameters of Qinghai Lake are not yet available, this paper aims to study the spatial and temporal variations of the water clarity (i.e., Secchi-disk depth, ZSD) and suspended particulate matter concentration (CSPM) in Qinghai Lake from 2001 to 2020 using MODIS images. First, the four atmospheric correction models, including the NIR–SWIR, MUMM, POLYMER, and C2RCC were tested. The NIR–SWIR with decent accuracy in all bands was chosen for the experiment. Then, four existing models for ZSD and six models for CSPM were evaluated. Two semi-analytical models proposed by Lee (2015) and Jiang (2021) were selected for ZSD (R2 = 0.74) and CSPM (R2 = 0.73), respectively. Finally, the distribution and variation of the ZSD and CSPM were derived over the past 20 years. Overall, the water of Qinghai Lake is quite clear: the monthly mean ZSD is 5.34 ± 1.33 m, and CSPM is 2.05 ± 1.22 mg/L. Further analytical results reveal that the ZSD and CSPM are highly correlated, and the relationship can be formulated with ZSD=8.072e−0.212CSPM (R2 = 0.65). Moreover, turbid water mainly exists along the edge of Qinghai Lake, especially on the northwestern and northeastern shores. The variation in the lakeshore exhibits some irregularity, while the main area of the lake experiences mild water quality deterioration. Statistically, 81.67% of the total area is dominated by constantly increased CSPM, and the area with decreased CSPM occupies 4.56%. There has been distinct seasonal water quality deterioration in the non-frozen period (from May to October). The water quality broadly deteriorated from 2001 to 2008. The year 2008 witnessed a sudden distinct improvement, and after that, the water quality experienced an extremely inconspicuous degradation. This study can fill the gap regarding the long-time monitoring of water clarity and total suspended matter in Qinghai Lake and is expected to provide a scientific reference for the protection and management of the lake.