To improve the utilization of fertilizer and water resources at the same time, a novel slow-release multielement compound fertilizer (SMF) with the function of water retention was prepared. The fertilizer nutrients (11.3% N, 9.6% P2O5, 6.1% K2O, and 0.76% Cu) were entrapped in the alginate matrix granules, and the sodium alginate-g-ploy(acrylic acid) (SA-g-PAA) superabsorbent polymer was used as a coating material. The structural and chemical characteristics of the product as well as its efficiency in slowing nutrient release and water evaporation in soil were examined. The degradation of the SA-g-PAA coating was assessed by examining the weight loss with incubation time in soil. Additionally, the nutrient release mechanism was proposed and the diffusional exponent n was calculated. These studies showed that the product with good slow-release and water-retention properties, being partially degradable in nature, could be expected to have wide potential applications in modern agriculture and horticulture.