In order to explore the response of photosynthetic characteristics, yield, nitrogen absorption and utilization, and soil nutrients of direct seeding cotton in the Yangtze River Basin to nitrogen reduction and carbon increment measures, and screen suitable nitrogen application methods, cotton variety Ganmianza 0906 was selected as the object, four nitrogen application methods were set [N0, no nitrogen applied; N1, conventional nitrogen application, nitrogen rate of 345 kg·hm-2 for pure N; N2, 20% nitrogen reduction, nitrogen rate of 276 kg·hm-2 for pure N; N3, nitrogen reduction and carbon increment, nitrogen rate of 276 kg·hm-2 for pure N, and 10% of pure N provided by organic fertilizer], the changes of photosynthetic parameters of functional leaves, population biomass, yield and its components, nitrogen absorption and utilization, and soil nutrients content were determined. The results showed that compared with N0, the net photosynthetic rate of the treatments with nitrogen application at full boll stage was increased significantly (P<0.05) by 13.47%-33.38% in 2020 and 30.32%-39.64% in 2021. Compared with N1 treatment, N2 and N3 treatments did not significantly reduce the intercellular CO2 concentration, stomatal conductance and transpiration rate of cotton functional leaves. Compared with the N1 treatment, N3 treatment did not significantly reduce cotton population biomass and seed cotton yield. The agronomic utilization rate and partial productivity of nitrogen fertilizer under N3 treatment were significantly increased by 16.62% and 19.15%, respectively, in 2020 as compared with the N1 treatment, and by 21.03% and 22.14%, respectively, in 2021. In 2020-2021, the contents of soil organic matter, total nitrogen, available phosphorus and available potassium under N3 treatment were not significantly lower than those under the N1 treatment, which could maintain the stability of soil nutrients. In 2020, the content of soil nitrate nitrogen was significantly lower under N3 treatment than that under N1 treatment by 49.72%. To sum up, it could stabilize cotton yield, improve nitrogen use efficiency, maintain soil nutrients by reducing the application rate of nitrogen by 20% from the conventional application rate, coupled with organic fertilizer replacing 10% of the total nitrogen, which is conducive to the green development of cotton production in the Yangtze River Basin.