The excessive chemical fertilizer (CF) use has led the Chinese government to adopt a zero-growth policy for CF use, highlighting the urgent need to develop strategies for the tradeoffs between food security and soil health practices, particularly in the ecologically sensitive regions of Southwest China. This study develops a dual-objective assessment framework that integrates advanced analytical methodologies to investigate key aspects of CF use over the period from 2010 to 2020. Specifically, this work explores the spatiotemporal dynamics of CF application, quantifies the effects of reduction measures, examines the relationship between CF use and agricultural productivity, and identifies the primary drivers of CF-driven pollution. Our findings reveal several key insights: (i) CF application rates initially experienced a significant increase, followed by a notable decline. The trend was accompanied by a clear spatial clustering, particularly observed in Yunnan, eastern Sichuan, and Chongqing. (ii) The implementation of China’s zero-growth policy for CF use has been effective, resulting in an estimated reduction of approximately 5 million tons in CF use. (iii) A strong decoupling relationship between CF application and agricultural output has developed since 2015, primarily driven by the improvements in CF use efficiency and technological progress, which have also contributed to the reduction in CF application. This research offers valuable insights for regions across China striving to mitigate the environmental impact of CF while ensuring food security, thereby supporting the strategies for sustainable agricultural practices.