Drought and low amounts of mineral nutrients in the soil are the two leading global constraints in arid and semiarid regions. Their detrimental effects on soils and crops can be alleviated by applying controlled release and biodegradable fertilizers to better and sustain the crops. On a global scale, spinach (Spinacia oleracea L.) is an essential leafy green vegetable that is biologically considered a reliable source of essential nutrients and minerals for human health. A comprehensive approach is needed to manage water stress to mitigate the impacts of stress-caused damage and to examine this for better and increased plant production. An experiment was conducted using potassium-nitrate-containing chitosan/montmorillonite microparticles (150 mg) under mild and severe drought stress (MDS: 50% and SDS: 35% FC, respectively). The treatments include control (no KNO3 and 70% FC as normal irrigation (NI)), KNO3 + NI, 50% FC as mild drought stress (MDS), KNO3 + MDS, 35% FC as severe drought stress (SDS) and KNO3 + SDS. Results revealed that drought stress decreased all studied physiological parameters and increased oxidative stress indicators in spinach. Applying KN significantly increased root (122%) and shoot length (4%), shoot fresh weight (32%) and shoot dry weight (71%), chlorophyll a (88%), carotenoids (39%), total soluble proteins (50%), soluble sugars (51%), potassium (80%), and phosphorous (32%) concentrations over No KN at severe drought. While stress indicators, like glycine betaine, malondialdehyde, hydrogen peroxide, electrolyte leakage, peroxidase, superoxide dismutase, and ascorbic acid levels, were increased in stress. Treatment KN was proved efficient and effective in improving spinach physiological status in both MDS and SDS.