Soil nutrients loss in karst area is an urgent eco-environmental problem. To control soil erosion and improve soil quality, calcium alginate−rice straw biochar composite (CA−MRB300) was prepared by embedding method. The retention mechanisms of soil nutrients onto CA−MRB300 were explored through batch adsorption experiments of soil nutrients, soil column leaching experiments combined with the analysis of physicochemical properties and soil enzyme activity. The effects of CA−MRB300 and its co-application with fertilizer on plant growth were investigated by a pot experiment. The results suggested that CA−MRB300 effectively retained PO43− and NO3− in lime soil mainly through surface precipitation and physical adsorption. The addition of CA−MRB300 increased the activities of alkaline phosphatase, urease, and sucrase in lime soil. Increased activity of urease accelerated the hydrolysis of urea to NH4+ in lime soil. Compared to a low proportion, a high proportion of CA−MRB30 was more likely to lead to the loss of K+. Moreover, the application of CA−MRB300 alone was more beneficial to the growth of soybean than the co−application of CA−MRB300 with fertilizer. This study indicates that CA−MRB300 has a great potential for application in retaining nutrients and promoting crop growth in lime soil.