||Agricultural production systems are facing the challenges of increasing food production while reducing environmental cost, particularly in China. To improve yield potential and eco-efficiency simultaneously for the rice-wheat rotation system in China, we investigated changes in potential yields and yield gaps based on the field experiment data from 1981 to 2009 at four representative agro-meteorological experiment stations, along with the Agricultural Production System Simulator (APSIM) rice-wheat model. We further optimized crop cultivar and sowing/transplanting date, and investigated crop yield, water and nitrogen use efficiency, and environment impact of the rice-wheat rotation system in response to water and nitrogen supply. We found that the yield gaps between potential yields and farmer’s yields were about 8101 kg/ha or 45.3% of the potential yield, which had been shrinking from 1981 to 2009. To improve yield potentials and eco-efficiency, the cultivars of rice and wheat that properly increase both radiation use efficiency and grain weight are promising. Rice cultivars breeding need to maintain the length of panicle development and reproductive phase. High-yielding wheat cultivars are characterized by medium vernalization sensitivity, low photoperiod sensitivity and short length of floral initiation phase. Proper shift in sowing date can alleviate the negative effect of climate risk. Intermittent irrigation scheme (irrigate until surface soil saturated when average water content of surface soil is < 50% of saturated water content) for rice, together with nitrogen application rate of 390-420 kg N/ha (180-210 kg N/ha for rice and 210 kg N/ha for wheat), is suggested for the rice-wheat rotation system to maintain high yield with high resource use efficiency. This suggested nitrogen application rates are lower than those currently used by many local farmers. Our findings are useful to improve yield potential and eco-efficiency for the rice-wheat rotation system in China. Furthermore, this study demonstrates an effective approach with crop modelling to design fanning system for sustainable intensification, which can be adapted to other farming systems and regions.