Effects of arbuscular mycorrhizal fungi (AM) on the growth of daylily (Hemerocallis citrina Baroni) and soil fertility were investigated by measuring daylily growth, soil nutrition contents, soil microbial population, and enzyme activities in a coal mining subsidence loess hilly area of northern Shaanxi. Results showed that AM fungal inoculation significantly increased plant height and crown width, mycorrhizal colonization rate, and hyphal density. Compared with control, AM fungal inoculation increased leaf photosynthesis rate, soluble sugar content, and catalase activity by 51%, 12%, and 79%, respectively. Moreover, the soil conductivity and organic matter, available nitrogen, and potassium content in the rhizosphere soil were significantly higher in mycorrhizal plants than control, and the contribution rates of AM fungal inoculation to bacteria population and acid phosphatase activity in rhizospheric soil were 77% and 24%, respectively. This showed that AM fungal inoculation may play an important role in enhancing plant resistance stress and improving soil fertility, soil microbial population, and enzyme activities. It will have an important value in promoting the growth of cash crops and further research on degraded land reclamation.