A double-coated, slow-release, and water-retention urea fertilizer (DSWU) was prepared by cross-linked poly(acrylic acid)-containing urea (PAAU) (the outer coating), polystyrene (PS) (the inner coating), and urea granule (the core). Elemental analysis results showed that the nitrogen content of the product was 33.6 wt %. The outer coating (PAAU) regulated the nitrogen release rate and protected the inner coating from damage. The slow-release property of the product was investigated in water and in soil. The possible mechanism of nitrogen release was proposed. The influences of PS coating percentage, temperature, water absorbency, and pH on the release of nitrogen were also investigated. It was found that PS coating percentage, temperature, and water absorbency had a significant influence on the release of nitrogen. However, the pH had no effect. The water-retention property of the product was also investigated. The results showed that the product not only had a good slow-release property but also excellent water-retention capacity, which could effectively improve the utilization of fertilizer and water resources. The results of the present work indicated that the DSWU would find good application in agriculture and horticulture, especially in drought-prone areas where the availability of water is insufficient.