Crop straws usually have high lignin and cellulose contents and decompose slowly when returned to the soil, which is not always conducive to crop growth. In this study, we investigated the effects of short and ammoniated straw application on soil properties, crop yield, and water use efficiency (WUE) in a summer maize (Zea mays L.)–winter wheat (Triticum aestivum L.) rotation system on the Loess Plateau, China. There were four treatments: long straw (ca. 50 mm) mulching (S+M), long straw (ca. 50 mm) plowed into the soil (S+P), ammoniated long straw (ca. 50 mm) plowed into the soil (A+S+P), and ammoniated short straw (ca. <1 mm) plowed into the soil (A+PS+P). The A+S+P and A+PS+P treatments had lower soil organic carbon (SOC) contents and higher total nitrogen (TN) contents, thereby resulting in lower soil C/N ratios than those of the S+M and S+P after 3-yr study. Furthermore, the A+S+P and A+PS+P treatments improved soil structural stability, as indicated by the large amount of water stable aggregates (>0.25 mm) present. The mean maize and wheat yield in the A+PS+P treatment were statistically significantly higher than those in the S+M (3.5 and 9.5%, respectively) and S+P (4.3 and 7.3%, respectively) treatments. Net income with A+PS+P was the highest and increased by US$257, 212, and 40 ha–1, respectively, compared with S+M, S+P and A+S+P. We suggest that ammoniated and short straw application is an effective method for improving the soil properties and increasing crop productivity.