An important way of utilizing agricultural wastes to improve soil quality is the use of planting and breeding waste compost (PBWC). However, the impact of compost on agricultural production systems is unclear. Therefore, in order to study the effect of PBWC on crop growth, soil environment, and circular agriculture, PBWC [sheep manure (SM): tail vegetable (TV): corn straw (CS) = 6: 3: 1] was used based on chemical fertilizer reduction for zucchini production. In zucchini production systems, R9 (chemical fertilizer reduction by 30 % + 9,000 kg ha−1 PBWC) treatment was most effective in improving the quality and yield of zucchini fruits, mainly by improving the soil microenvironment, manifested in (1) increasing soil alkali-hydrolyzable nitrogen (AN) available potassium(AK), and soil organic matter (SOM), reducing EC, and improving C/N. (2) Increasing the richness and metabolic capacity of bacterial community. (3) Increasing the abundance of Proteobacteria, a phylum with absolute dominance (up to 32.46 %). Then, an optimization model of “summer corn − greenhouse zucchini − fattened sheep” was constructed to analyze the effect of changes in fertilizer dosage usage on the whole model. Compared with the local traditional recycling model, the optimized system reduced the ratio of inorganic to organic nitrogen input from 2.8:1 to 1.4:1, increased the recycling rate of nitrogen (N), phosphorus (P), and potassium (K) by 31.28 %, 50.84 %, and 30.25 %, respectively, and the net energy yield ratio (EYR) increased by 1.04. The optimized recycling system had significant economic and environmental benefits, which would become the basis for moving towards more sustainable farming. Overall, the circular agriculture model with PBWC returning as the core achieves sustainable production by improving material recycling and soil microenvironment. Therefore, chemical fertilizer reduction by 30 % combined with 9000 kg ha−1 PBWC can be used in practical production to improve the productivity of the circular agriculture model and achieve high yield and high quality crops.