Although various measures are applied to control farmland nitrogen loss at the field scale, effective control strategies at the watershed scale are still lacking due to poor understanding of nitrogen loss risks across different scales. Therefore, an innovative approach to assess the risk of nitrogen loss to surface waters from crop production at the watershed scale was established, with nitrogen surplus, a more accurate indicator, as a major source factor introduced to the traditional index method. Furthermore, this approach was applied in the Baiyangdian Lake Watershed, a typically agricultural-dominated watershed in China, and the control strategies for farmland nitrogen loss reduction were investigated with scenario analysis. The major results included: (1) Areas with high (2–4 for risk to river, 1.6–3.2 for risk to lake) and very high (>4 for risk to river, >3.2 for risk to lake) risks of nitrogen loss in crop production were relatively small. For example, in the wheat-maize rotation system, these areas accounted for only 2.1–3.5 % and 0.9–1.8% of the total study area, respectively. Additionally, the critical source areas of nitrogen loss were concentrated around the receiving water bodies. (2) The nitrogen surplus in wheat season increased the nitrogen loss to surface waters. Compared to the maize season, the area with high and very high risk for nitrogen loss to the nearby river in wheat-maize rotation system increased by 58.3% and 141.4%. Furthermore, the areas with high and very high risk for nitrogen loss to the lake in wheat-maize rotation system were 129.6% and 220.6% more than that during maize season. (3) Nitrogen loss risk to the nearby rivers was correlated with nitrogen surplus, but nitrogen loss risk to the lake was related to the transport coefficient. (4) The optimized scenario for nitrogen loss reduction in crop production was the combination of nitrogen surplus being less than 20 kg/ha and 500 m banning area around the river with no fertilizer application, which reduced the nitrogen loss risk to the nearby river and to the lake by 94–95% and 89–95%. The results of this study provide a scientific basis for nutrient resource management and non-point source pollution control.