Straw application has a wide range of environmental benefits that make it an effective practice for sustainable agriculture. However, little is well known about the impacts of ammoniated straw addition on soil water and crop canopy characteristics in maize cultivation systems. A 3-year field experiment of summer maize (Zea mays L.) in Northwest China was conducted to evaluate the effects of different straw applications on soil water storage, maize canopy growth, grain yield and water use efficiency (WUE). The three treatments were: (i) no straw (traditional tillage, CK), (ii) straw mulch (traditional straw returning, T1), and (iii) ammoniated straw incorporated into the soil (optimized straw returning, T2). The T2 treatment increased average WUE by 14.8%, 7.8%, and 16.1% in 2016, 2017, and 2018, respectively, relative to the CK treatment. The 3-year average grain yield of the T2 treatment was 13.5% and 8.3% greater than grain yield of the CK and T1 treatments, respectively. Harvest index and 100-kernel weight of summer maize in the T2 treatment were higher than observed for the CK and T1 treatments. Across the three growing years, the T2 treatment was superior over the T1 and CK treatments in improving average LAI, spatial density of leaf area, green canopy cover and aboveground biomass. Hence, our study recommends that using ammoniated straw incorporation could be a promising application for synergistically improving maize growth, WUE and grain yield within this semi-arid region.