The large dryland area of the Loess Plateau (China) is subject of developing strategies for a sustainable crop production, e.g., by modifications of nutrient management affecting soil quality and crop productivity. A 19 y long‐term experiment was employed to evaluate the effects of fertilization regimes on soil organic C (SOC) dynamics, soil physical properties, and wheat yield. The SOC content in the top 20 cm soil layer remained unchanged over time under the unfertilized plot (CK), whereas it significantly increased under both inorganic N, P, and K fertilizers (NPK) and combined manure (M) with NPK (MNPK) treatments. After 18 y, the SOC in the MNPK and NPK treatments remained significantly higher than in the control in the top 20 cm and top 10 cm soil layers, respectively. The MNPK‐treated soil retained significant more water than CK at tension ranges from 0 to 0.25 kPa and from 8 to 33 kPa for the 0–5 cm layer. The MNPK‐treated soil also retained markedly more water than the NPK‐treated and CK soils at tensions from 0 to 0.75 kPa and more water than CK from 100 to 300 kPa for the 10–15 cm layer. There were no significant differences of saturated hydraulic conductivity between three treatments both at 0–5 and 10–15 cm depths. In contrast, the unsaturated hydraulic conductivity in the MNPK plot was lower than in the CK plot at depths of 0–5 cm and 10–15 cm. On average, wheat yields were similar under MNPK and NPK treatments and significantly higher than under the CK treatment. Thus, considering soil‐quality conservation and sustainable crop productivity, reasonably combined application of NPK and organic manure is a better nutrient‐management option in this rainfed wheat–fallow cropping system.