Cover cropping during the fallow period would aid crop production and achieve environmental and economic benefits by enhancing soil water and nutrient cycling, while ameliorating soil structure in the farming system. In this paper, we reviewed the effects of cover cropping on soil water, fertility, crop yield, and its environmental (carbon sequestration, reduction of leaching, and erosion prevention) and economic benefits. The feasibility of cover cropping in the dryland farming systems on the Loess Plateau was discussed in terms of its effects on water as a limiting factor, improvements of soil fertility, and enhancements of crop production. Field studies and modelling works on cover cropping systems were related to the processes of soil water, soil carbon and nitrogen, crop production, environmental and economic benefits, and selections of cover crop type and management practices. Comprehensive assessments in the context of climate change should be given more attention in the future, which would provide a scientific basis for the extension of the cover cropping system to the Loess Plateau.