A novel cellulose acetate-coated compound fertilizer with controlled-release and water-retention (CAFCW) was prepared, which possessed the three-layer structure. Its core was water-soluble compound fertilizer granular, the inner coating was cellulose acetate (CA), and the outer coating was poly(acrylic acid-co-acrylamide)/unexpanded vermiculite (P(AA-co-AM)/UVMT) superabsorbent composite. The effects of the amount of acrylamide, crosslinker, initiator, degree of neutralization of acrylic acid (AA), and unexpanded vermiculite concentration on water absorbency were investigated and optimized. The water absorbency of CAFCW was 72 times its own weight if it was allowed to swell in tap water at room temperature for 90 min. Element analysis and atomic absorption spectrophotometer results showed that the product contained 11% nitrogen, 6% phosphorus (shown by P205),9% potassium (shown by K2O), 1% calcium (shown by CaO), and 0.4% magnesium (shown by MgO). Swelling rate, slow-release, and water-retention properties of CAFCW were also investigated. This product with good controlled-release and water-retention capacity, being degradable in soil and environmentally friendly, could be especially useful in agricultural and horticultural applications. Copyright (C) 2008 John Wiley & Sons, Ltd.