Unprecedented climate change and ever-increasing demand for dairy products call for solutions that can ensure stable and sustainable milk production in different climate regions. Fully-enclosed dairy farms act as a promising option while its economic and environmental performance is poorly studied. Here, we evaluated the potential of improvement on milk yield and milk supply inequality among regions by developing fully-enclosed dairy farms throughout China, as well as their economic feasibility and environmental impacts. Results showed that: (1) fully-enclosed dairy farms present a 33 % higher milk yield per lactating cow together with a 38 % lower coefficient of variation in milk production across climate regions than semi-enclosed ones; (2) greenhouse gas and NH3 emissions of fully-enclosed dairy farms are effectively declined compared with semi-enclosed ones; (3) the inequality in fresh milk supply can be reduced by 51 % through strategically locating fully-enclosed dairy farms around cities; and (4) industrial optimization on the internal structure of fully-enclosed dairy farms is economically feasible across different climate regions in China, with an average improvement of 54 %. Our analysis suggests to develop fully-enclosed dairy farms surrounding urban areas for meeting milk demand alongside positive effects on environmental sustainability, which also offers a lens for the livestock sector to define better policies that improve the sustainability of milk production on the planet.