In the context of global advocacy for Sustainable Development Goals (SDGs), agriculture and rural areas as the main carrying place of human production activities, is not only the focus area of SDGs, but also the focus point for the implementation of SDGs. Gully agricultural land and water resources (GALWR) sustainable use in China's Loess Plateau is vital to the evolution law of human–earth relationships and agricultural multi‐functional transformation for SDGs. However, the characteristics and patterns of GALWR and the optimization strategy are still unclear. Here, we identified the spatial distribution characteristics of GALWR and evaluated the carrying capacity of GALWR in the loess hilly and gully region (LHGR). We further investigated the driving factors for GALWR sustainable use and the optimization strategy of the dual guidance of economy and society as well as resources and ecology. The following results were obtained: (1) The distribution of cultivated land in the LHGR largely differed among districts and counties, with a higher distribution in the middle and a lower one on both sides. The matching degree of the GALWR was low, and the sensitivity analysis showed that the per capita water resources, the proportion of primary production, the drought index, and the vegetation coverage were the sensitive factors affecting the sustainable use of the GALWR in the LHGR. (2) There were obvious differences in the coupling and coordination of GALWR in the LHGR in 2020, and was a lack of synchronization regarding the GALWR use. (3) In order to form a gully rural regional functionalized and structured spatial structure system, the optimized strategy of GALWR for SDGs in the Loess Plateau was proposed according to adaptive management and the multi‐element coupling process of “water‐land‐climate‐crop” to protect gullies, rivers, forests, farmlands, and lakes in a coordinated way and in combination with land engineering control measures. This study provides a guideline for the transformation of agriculture and the construction of a new pattern of high‐quality agricultural development in the Loess Plateau.