Plastic film mulching technology can effectively enhance crop yield and quality, and the use of mulch has been increasing in recent years; however, the problem of mulch residue is worsening due to the large amount of recycling work and slow natural degradation. In this study, a potato seedling killing and residual film recycling machine is designed to provide good working conditions for potato harvesters before harvesting in response to the problems of difficult separation of film tangles, the low net rate of recycling due to the mixing of residual film with soil, and the high soil content in residual film recycling operations in northwest China. The machine is based on the potato monoculture and double row planting mode in Gansu area. This paper puts forward the overall design scheme and carries out the theoretical analysis and parameter determination of the key components, such as the seedling killing device, the film surface cleaning device, the film unloading device, and so on. Using EDEM software to carry out the virtual simulation test and Design-Expert13 to analyze the test results, we determined the optimal working scheme for the machine, with a forward speed of 0.8 m/s, a film gap of 125 mm, and a spiral stirrer speed of 600 r/min. Based on a field test for verification, the test results show that the machine’s residual film recovery rate was 83.3%, the impurity rate was 3.8%, and the rate of injury to the potatoes was 1.4%. The machine meets the requirements of national and industry standards, and it can simultaneously realize straw crushing, film surface cleaning, residual film recycling, and hydraulic film unloading operations, with better operating results and while reaching the expected results. It can also provide a reference for the design and testing of a seeding and residual film recycling machine.