Developing slow-release fertilizers can not only increase crop yield in agricultural production but also reduce environmental pollution. Herein, we use diatomite geopolymer (DG) from natural diatomite (Dia) as a natural carrier and combine it with nutrient potassium poly(dihydroxymethylurea) phosphate (P(NPK)). After that, acrylamide (AM) and acrylic acid (AA) were used to encapsulate it through the in situ graft copolymerization method to obtain a bifunctional slow-release fertilizer (P(NPK)@DG-g-PAMA). The structure and micromorphology of P(NPK)@DG-g-PAMA were characterized by FTIR, XRD, XPS, XRF, SEM, and EDS, and its soil water retention, nutrient availability, and corn growth were evaluated. The results showed that P(NPK)@DG-g-PAMA had excellent water absorption (270.5 g/g), water retention (73.33% after 70 d), and reusability (156.94 g/g after 8 cycles). It was also found that the eco-friendly P(NPK)@DG-g-PAMA with high porosity and three-dimensional reticulation presented a good slow-release performance (34.6% cumulative release of P at 60 days) and complied with the Committee for European Normalization (CEN) standards. In addition, the agricultural application of P(NPK)@DG-g-PAMA further demonstrated that it could positively accelerate the growth of maize in roots, leaves, and chlorophyll content. Furthermore, the swelling property in different environments was investigated. These results reveal that P(NPK)@DG-g-PAMA has the advantages of prolonging fertilizer release periods, reducing irrigation times, especially in the early spring season, inhibiting the water pollution of fertilizer runoff, and accelerating the growth of plants. It is a more valuable prospect in semiarid and arid regions.