The balance between open space and built environment is one of the key constituents of a sustainable city. The purpose of this research is to assess the ecosystem services, plant diversity pattern, and water quality of an urban green zone with a lake so that the adverse impact of encroaching these spaces can be scientifically proved. Dhanmondi Lake is one of the earliest examples of manmade water bodies in Dhaka City. A total of five provisioning services (fish, fruit, medicine, flower, and fuel), ten regulating services (photosynthesis, CO2 sequestration, O2 production, pollination, seed dispersal, air quality regulation, airflow, noise control, etc.), eighteen cultural services under four categories (relaxation, recreation and spiritual, social relation, economic, and academic) have been identified in the study area. Dhanmondi lake provides a huge range of habitat for fish (06), birds (18), and plant (34) species. The value of plant diversity in Dhanmondi lake is ranging from D = 0.72−0.93 (out of 0−1). It indicates the rich plant diversity pattern. The quality of the lake water is quite decent. The slight deterioration in pH (7.3−8.5), DO (3.1−4.1 mg/l) and alkalinity (252−344 mg/l) is caused due to the anthropogenic activities around the lake. A brief Total Economic Value Framework has been produced to study the valuation of these Ecosystem Services. This study has the strength to re-evaluate the importance and impact of the open spaces in an urban area. Also, it provides scientific evidence for new open space development for a sustainable smart city.