With the aim of improving fertilizer use efficiency and minimizing the negative impact on the environment, a new coated controlled-release fertilizer with the function of water retention was prepared. A novel low water solubility macromolecular fertilizer, poly(dimethylourea phosphate) (PDUP), was "designed" and formulated from N,N'-dimethylolurea (DMU) and potassium dihydrogen phosphate. Simultaneously, an eco-friendly superabsorbent composite based on wheat straw (WS), acrylic acid (AA), 2-acryloylamino-2-methyl-1-propanesulfonic acid (AMPS), and N-hydroxymethyl acrylamide (NHMAAm) was synthesized and used as the coating to control the release of nutrient. The nitrogen release profile and water retention capacity of the product were also investigated. The degradation of the coating material in soil solution was studied. Meanwhile, the impact of the content of N-hydroxymethyl acrylamide on the degradation extent was examined. The experimental data showed that the product with good water retention and controlled-release capacities, being economical and eco-friendly, could be promising for applications in agriculture and horticulture.