Soil degradation and the accompanying decline in crop yields are the main limiting factors for the further development of agriculture on the Chinese Loess Plateau. A 10-year experiment was conducted in Linfen on the Loess Plateau to assess the potential benefits of controlled traffic on agricultural production. In this region, long-term traditional ploughing with straw removal has resulted in a decline of soil productivity and poor soil structure. Several treatments were compared: controlled traffic with no-tillage and straw cover (NTSC), controlled traffic with shallow tillage and straw cover, and traditional tillage (TT) in a winter wheat (Triticum aestivum L.) monoculture. Results show clear benefits of controlled traffic farming. Winter wheat growth in ploughed plots was much slower than in controlled traffic plots. Mean yield from 1998 to 2007 was 11.2% lower for traditional tillage than for controlled traffic plots. The best results were achieved by a no-tillage straw cover and controlled traffic system (NTSC), which resulted in the greatest benefits to soil structure after 10 years. The NTSC significantly improved soil organic matter content in the top 30 cm by 27.2%, total N by 10.8%, and available P (top 10 cm) by 92.3% compared with TT. Aeration (>60 μm) and capillary porosity (2-60 μm) were 155.0% and 16.1% greater, respectively, in NTSC plots than in TT plots. Consequently, for NTSC, final water infiltration rates were 67.4% greater than for TT, whereas water content in the top 130 cm was 14.9% higher than in TT, respectively. We conclude therefore that controlled traffic combined with no-tillage and straw cover is a valuable system for restoring soil productivity and quality of seriously degraded soils on the Loess Plateau for the sustainable development of agriculture in dryland China.