Straw mulching increases soil water availability, but the influence of tillage practices with straw mulching on soil water, soil nitrogen, root distribution, and the physiological response of wheat plants is poorly understood. Field experiments (2013–2017) were conducted to determine the combined effects of straw mulching (0 and 8,000 kg ha−1) and tillage methods (no-tillage, rotary tillage, and plow tillage) on soil water, N, root distribution, plant N nutrition, tiller capability, and grain yield of dryland wheat. Straw mulching with no-tillage showed higher soil moisture, mineral N, and Olsen-P content than no-mulch with rotary tillage or plow tillage. These changes increased the total root length and surface area in the 0–20 cm soil layer but not in the 20–40 cm soil layer. Topsoil foraging strategies of root increased total N uptake, wheat return N from straw, and N balance while reducing N surplus, indicating that maize straw harvesting by mulching with no-tillage leads to a more efficient N recycling in the winter wheat–summer maize rotation system. Straw mulching with no-tillage showed greater aboveground plant dry mass and shoot N%, leading to increased plant N nutrition, tillering capability, and grain yield. Our results indicated that maize straw mulch with no-tillage increased fertile spike and grain yield by increasing soil water and N availability and maximizing root-soil interactions among the different combinations studied. Maize straw mulching with no-tillage could hence be recommended to dryland farming communities to transition from rotary tillage to a no-tillage conservation system and to increase soil and crop productivity in the maize-wheat rotation system.