Degraded soils (including salinized, eroded, and low organic matter) resulting from natural and human effects are universal in arid and semi-arid regions all over the world. Bentonite and humic acid (BHA) are increasingly being tested to remediate these degraded lands, with potential benefits on crop production and soil health. A field study was conducted to quantify the effects of BHA application at six rates (0, 6, 12, 18, 24, and 30 Mg ha−1) on (i) dynamic changes in soil properties and (ii) oat crop productivity parameters in a dryland farming ecosystem. The specific objective of this paper was to determine the residual effects four to five years after a one-time BHA application on soil health and crop performance. The findings demonstrated that with the increasing rates of one-time BHA application, soil profile water storage displayed a piecewise linear plus plateau increase, whereas soil electrical conductivity, pH, and bulk density were all reduced significantly (p < 0.05) in the 0−20 cm and 20−60 cm layers. The improved soil environments gave rise to an increased activity of soil enzymes urease, invertase, and catalase that, respectively, reached peak values of 97%, 37%, and 32% of the control at the rates of 18 to 24 Mg BHA ha−1. In turn, this boosted soil nutrient turnover, leading to a 40% higher soil available P. Compared with the control treatment, application of BHA at the estimated optimum rate (roughly 24 Mg ha−1) increased grain yield by 20%, protein yield by 62%, water use efficiency by 41%, and partial factor productivity of N by 20%. The results of this study indicated for the first time that a one-time BHA application would be a new and effective strategy to combat land degradation, drought, and promote a sustainable soil micro-ecological environment in dryland agroecosystems under a varying climate scenario.