A long-term rotation experiment was established in 2001 to compare conservation tillage techniques with conventional tillage in a semi-arid environment in the western Loess Plateau of China. We examined resource use efficiencies and crop productivity in a spring wheat (Triticum aestivum L.)-field pea (Pisum arvense L.) rotation. The experimental design included a factorial combination of tillage with different ground covers (complete stubble removal, stubble retained and plastic film mulch). Results showed that there was more soil water in 0-30 cm at sowing under the no-till with stubble retained treatment than the conventional tillage with stubble removed treatment for both field pea (60 mm vs. 55 mm) and spring wheat (60 mm vs. 53 mm). The fallow rainfall efficiency was up to 18% on the no-till with stubble retained treatment compared to only 8% for the conventional tillage with stubble removed treatment. The water use efficiency was the highest in the no-till with stubble retained treatment for both field pea (10.2 kg/ha mm) and spring wheat (8.0 kg/ha mm), but the lowest on the no-till with stubble removed treatment for both crops (8.4 kg/ha mm vs. 6.9 kg/ha mm). Spring wheat also had the highest nitrogen use efficiency on the no-till with stubble retained treatment (24.5%) and the lowest on the no-till with stubble removed treatment (15.5%). As a result, grain yields were the highest under no-till with stubble retained treatment, but the lowest under no-till with no ground cover treatment for both spring wheat (2.4 t/ha vs. 1.9 t/ha) and field pea (1.8 t/ha vs. 1.4 t/ha). The important finding from this study is that conservation tillage has to be adopted as a system, combining both no-tillage and retention of crop residues. Adoption of a no-till system with stubble removal will result in reductions in grain yields and a combination of soil degradation and erosion. Plastic film mulch increased crop yields in the short-term compared with the conventitillage practice. However, use of non-biodegradable plastic film creates a disposal problem and contamination risk for soil and water resources. It was concluded that no-till with stubble retained treatment was the best option in terms of higher and more efficient use of water and nutrient resources and would result in increased crop productivity and sustainability for the semi-arid region in the Loess Plateau. The prospects for adoption of conservation tillage under local conditions were also discussed.