Feeding management in dairy animals is crucial for ensuring optimal production apart from making the farming as a whole, a more sustainable activity. In our study we evaluated the production and environmental effects of two different feeding regimens i.e., one dominated by traditional cottonseed meal (CSM) and other with coated urea (slow release urea - SRU) as a replacement for CSM on dairy buffalo production. The SRU at 2% level was evaluated by conducting two different trials using twelve lactating Murrah buffaloes and four adult Murrah buffalo bulls. Neither diet nor dry period management showed any substantial effect on milk components, intakes, nutrients' digestibility coefficients, and nutritive values. The SRU diet revealed increased (P < 0.01) rumen pH, ammonia nitrogen, volatile fatty acids, and microbial nitrogen yield, which were interacted with time of post-prandial sampling. The dynamics of nitrogen metabolism revealed unaltered N-based parameters, except for degradable-N intake and serum urea-N at 3 hr post-feeding. The CSM replacements did not influence (P > 0.05) the residual feed intake, but led to an enhanced milk retention efficiency of nitrogen, calcium, and phosphorus contents, thus reducing their impact on soil pollution and eutrophication of water bodies. Despite an unaltered (P > 0.05) enteric methane emission, SRU diets achieved in decreasing manure methane and nitrous oxide emission. Furthermore, the virtual water flow and lifecycle assessment revealed a water sparing effect and low carbon foot print per unit milk production. In summary, the CSM replacements with SRU could achieve an economical and eco-friendly production system from animal nutrition perspective.