To sustain the further world population, more fertilizers are required, which may become an environmental hazard, unless adequate technical and socioeconomic impacts are addressed. In the current study, slow-release formulations of nitrogen fertilizer were developed on the basis of natural attapulgite (APT) clay, ethylcellulose (EC) film, and sodium carboxymethylcellulose/hydroxyethylcellulose (CMC/HEC) hydrogel. The structural and chemical characteristics of the product were examined. The release profiles of urea, ammonium sulfate, and ammonium chloride as nitrogen fertilizer substrates were determined in soil. To further compare the release profiles of nitrogen from different fertilizer substrates, a mathematical model for nutrient release from the coated fertilizer was applied to calculate the diffusion coefficient D. The influence of the product on water-holding and water-retention capacities of soil was determined. The experimental data indicated that the product can effectively reduce nutrient loss, improve use efficiency of water, and prolong irrigation cycles in drought-prone environments.