The invention discloses a fertilizer with drought resisting and soil loosening functions and a production method thereof. The fertilizer comprises urea, powdered ammonium phosphate, a powdered potash fertilizer, a humic acid raw material, a water-retaining agent and a soil loosening agent bentonite. The production method comprises the following steps: mixing the urea, the powdered ammonium phosphate, the powdered potash fertilizer, the humic acid raw material, the water-retaining agent and the bentonite raw material; crushing the uniformly mixed raw materials; preparing the crushed raw materials into granules under steam pressure conditions, and drying the prepared granules; cooling the dried granules, and carrying out sieving; or respectively preparing the urea, the powdered ammonium phosphate, the powdered potash fertilizer, the humic acid raw material, the water-retaining agent and the bentonite raw material into granules; and mixing the granules, and carrying out sieving. According to the invention, the characteristics of the chemical fertilizer are changed, the soil structure is improved, the resistance characteristics are enhanced, and the quality of seeds is improved.