The invention discloses an environment-friendly coated urea for reducing N2O discharge effectively. The coated urea is prepared from a coating material, a nitrification inhibitor and an adhesive, wherein the coating material is selected from clay minerals and charcoal. The effect is optimum by compounding bentonite and rice straw charcoal. The charcoal adjusts the soil structure, supplements organic matters, provides nutrients and creates a good environment for microorganisms primarily. The bentonite exerts the caking property and the water absorbing expansion character, so that a purpose of retaining water and nutrients at the same time can be achieved. Combined with the nitrification inhibitor, the nitrogen leaching loss and N2O discharge can be reduced to the maximum extent, and nitrogen is controlled in an effective state. Experiments verify that under a condition of simulating continuous intense fall in the South, the effect of the coated urea is superior to that of conventional urea greatly, and 67% of N2O discharge can be reduced. Under a non-intense fall condition, compared with the conventional urea, the N2O discharge of the coated urea prepared by the method is averagely reduced by 77.83%.