Using slow-release fertilizer is one of the sustainable strategies to improve the effectiveness of fertilizers and mitigate the environmental pollution caused by excess usage of fertilizer. In this study, a slow-release urea fertilizer with water retention and photosensitivity properties was prepared by a two-step method. It was characterized by Fourier transform infrared spectroscopy, thermogravimetric analysis, scanning electron microscopy and an infrared camera. This fertilizer can prolong the release period of urea, improve water-retention capacity of soil, and carry out photothermal conversion under illumination. Comparing four release kinetics models, the Ritger–Peppas model was the best fitting model for releasing behavior in soil, and diffusion followed the Fickian mechanism. The application of fertilizer on winter wheat was carried out to intuitively evaluate the fertilizer’s effects on promoting plant growth and resisting water stress. Thus, this study provides a new strategy for improving fertilizer utilization rate and maintaining soil moisture, which will be beneficial for sustainable agriculture.