Purpose: Urea combined with nitrification inhibitors (NI) can significantly reduce nitrous oxide emissions (N2O) compared to urea. However, there is a lack of evidence for higher agronomic benefits and better environmental benefits, i.e., the ability to minimize N2O emissions and improve nitrogen (N) use efficiency (NUE) while maintaining high yield under N application rates lower than conventional N application rates.Methods: A 3-year in situ fertilization experiment was conducted under film mulching conditions in the Loess Plateau region with low rainfall. Three treatments of conventional N fertilization (CK), reduced N fertilization (RN), and RN with NI (RN + NI) were used to quantify soil N2O emissions, plant N uptake, NUE, and grain yield.Results: RN and RN + NI treatments significantly reduced N2O emissions by 17.29–29.15% and 56.00–60.51%, respectively, and significantly increased NUE by 10.79–21.27% and 17.11–25.70%, respectively, compared with CK treatment. However, there was no significant difference in average plant N uptake (178.96–191.37 kg N ha−1) and grain yield (7.84–8.14 t ha−1) among CK, RN, and RN + NI treatments. Furthermore, higher available soil water storage at sowing and large rainfall events during the first month after fertilization would enhance the effect of NI on inhibiting N2O emissions, since the efficiency of NI in reducing N2O emissions depends on the level of water-filled pore space.Conclusions: Therefore, reducing N application combined with NI can be used as an effective N fertilizer management measure, which is helpful to achieve agriculture sustainable development in areas similar to the climate model of the Loess Plateau.