Rural toilet retrofitting (RTR) is a complex, dynamic system that is affected by many factors and the positive/negative feedback relationships between subsystems and variables. Traditional technologies and management methods face challenges in fundamentally describing and solving problems in RTR. To bridge this gap, this study utilizes system dynamics and causal loop diagrams to explain such problems based on data collected from the stakeholders of the RTR in Jiaozhou from 2018 to 2019. Specifically, this study examines the RTR system from the perspectives of household users, wastewater treatment plants, local governments, grassroots promoters, operation and maintenance personnel, toilet supplier and construction teams, and fecal sludge end users. The factors and processes involved in RTR are identified, and the feedback and relationships among its major stakeholders are established. Results show that the motivation of farmers to engage in RTR is a key variable that affects their final decisions regarding retrofitting and maintaining toilet functions. Meanwhile, the important variables related to the feedback and relationships among the major stakeholders of RTR are mostly focused on policies, subsidies, technology, satisfaction, and cooperation. A scientific analysis method and the updated RTR plan for toilet revolution are then formulated to promote the implementation of RTR in developing countries.