In order to investigate the comprehensive effects of straw returning on soil physical and chemical properties, as well as cotton growth in Jiangsu, China, and to determine suitable high-yield and efficient straw returning measures, this study implemented three different straw returning methods: straw mulching (SM), straw incorporation (SI), and straw biochar (BC), with no straw returning served as a control (CT). The study aimed to assess the impact of these straw-returning measures on soil nutrients, soil moisture content, soil water storage, and deficit status, as well as primary indicators of cotton growth. The findings revealed that the total available nutrient storage under SM, SI, and BC showed an increase of 11.93%, 11.15%, and 32.39%, respectively, compared to CT. Among these methods, BC demonstrated a significant enhancement in soil organic carbon content, available phosphorus, and available potassium. Furthermore, SM exhibited a considerable increase in soil moisture content across all layers (0–40 cm), resulting in an average water storage increase of 7.42 mm compared to CT. Consequently, this effectively reduced the soil water deficit during the cotton development period. Moreover, the height of cotton plants was increased by SM, SI, and BC, with SM promoting the greatest growth rate of up to 66.87%. SM resulted in an 11.17 cm increase in cotton plant height compared to CT. Additionally, SM contributed to higher chlorophyll content in leaves at the end of the growth period. Overall, the indicators suggest that straw mulching is particularly effective in enhancing soil moisture and nutrient distribution, especially during dry years, and has a positive impact on promoting cotton development. Based on the results, straw mulching emerges as a recommended straw-returning measure for improving soil quality and maximizing cotton production in the study area.