Aims The objective of this study was to propose a maize-peanut intercropping system for traditional sole maize to increase economic benefits and decrease environmental pollution for dryland farming. Methods The treatments comprised sole maize, sole peanut, maize-peanut intercropping, maize-peanut intercropping-rotation (rotation of the maize and peanut planting strips every year), and maize-peanut intercropping-rotation with 20% and 40% N reduction in maize planting strip. Soil water and total N stock, photosynthetic traits, yield, greenhouse gas emissions, economic income, and interspecific relationships were evaluated. Results Intercropped maize absorbed more moisture but lost more N than sole maize. Maize-peanut intercropping had higher economic benefits and less N2O emissions than sole maize, but had no intercropped advantage on land equivalent ratio. In addition, intercropping increased the continuous cropping barriers of peanuts than a sole peanut. Rotation of the planting strips in intercropping increased the peanut yield and economic benefits compared with not rotating the planting strips, and the economic benefits reached the highest level in the third planting year. A 20% N reduction in maize planting strips can decrease the global warming potential without affecting economic benefits. A 40% N reduction in maize planting strips could reduce soil N stock, maize yield, water use efficiency, N use efficiency, land equivalent ratio, and income. Conclusions A maize-peanut intercropping-rotation system is recommended for dryland farming since it promoted efficient use of N and economic benefits and decreased N2O emission. The proper N reduction in maize planting does not lead to N stress but decreased global warming potential.