Straw mulching is a key method for controlling soil and water losses. Mulching costs may be reduced by applying it in strips rather than over entire areas. However, the effect of different straw mulching methods on the effectiveness of reducing soil erosion is unclear. In this study, the effects of straw mulching strip length (covering 1/4, 1/2, 3/4, and 4/4 of the slope length) and coverage rate (0.2, 0.5, and 0.8 kg m−2) on interception, infiltration, runoff, and soil erosion were investigated at the plot scale using rainfall simulation experiments. The further complex correlations between these variables were analyzed using structural equation modeling (SEM). Bare slopes were used as a control group. The rainfall intensity was chosen to be 60 mm h−1. The results showed that (1) the modified Merriam interception model can describe the change in interception with time under straw mulching conditions well (R2 > 0.91, NSE > 0.75). (2) A total of 35.39–78.79% of the rainwater is converted into infiltration on straw-covered slopes, while this proportion is 36.75% on bare slopes. The proportion of rainwater converted to infiltration was greatest (78.79%) when the straw covered 3/4 of the slope length at a coverage rate of 0.5 kg m−2, which was the most conducive to rainwater harvesting on the slope. (3) Straw mulching protects the topsoil from the impact of raindrops and directly affects the sediment yield (direct effect = −0.44). Straw mulching can also indirectly affect sediment yield by increasing interception, reducing runoff, and decreasing the sediment carrying capacity of runoff (indirect effect = −0.83). Compared with bare slopes, straw covering at least 1/2 of the slope length can significantly reduce runoff yield, but straw covering only 1/4 of the slope length can significantly reduce sediment yield. Moreover, once the straw mulch slope length reaches 3/4 and the coverage rate reaches 0.5 kg m−2, further increases in mulch slope length and coverage rate will not significantly reduce the runoff and sediment yields. These results assessed the effectiveness of different straw mulching methods in controlling soil and water losses on sloping farmland.