Reconfiguration of hillside fields into terraces is a key technique for water and soil conservation in mountainous regions. In this study, the effects of adding manure on soil water status and crop yields in newly-built terraces in 7 growing seasons on the semi-arid Loess Plateau of China were evaluated. Experimental treatments including CK (control treatment with no fertilizer), NP (nitrogen and phosphorus), M (manure), and MNP (manure, nitrogen and phosphorus) were employed with a field pea-spring wheat-potato cropping system. Manure groups are better able to conserve soil water, average soil water content in the 0-100. cm soil profile in the 5 years prior to sowing was over 42.2. mm in the MNP group than in the NP group, and 23.2. mm higher in the M group than in the CK group. After 7 years, soil water in the upper 200. cm of soil in the MNP and M groups was kept in balance, while significant soil water depletion reached the 140. cm soil layer in the CK and NP groups when compared to their values before sowing in 2004. Manure management significantly increased soil water stable macro-aggregates (>0.25. mm) compared to groups without manure in the 0-20 and 20-40. cm soil layers. Average yield over the 7 years was higher in the MNP group than in the CK, NP and M groups by 212%, 54% and 82%, respectively, and average water use efficiency (WUE) was higher by 207%, 51% and 77%, respectively. In the long run, treatment with inorganic fertilizer (NP) alone may not be sufficient to maintain high yields due to soil water depletion year after year. Farmers should be encouraged to apply manure to maintain the sustainability of agro-ecosystems in newly-built terraces in semi-arid areas. © 2012 Elsevier B.V.