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Purpose: Increasing crop yield to ensure global food security while decreasing carbon footprint (CF) is a challenge for sustainable agriculture. Although intercropping is suggested as a potential pathway in this regard, the balance between yield advantage and CF is unclear, especially under different nitrogen (N) application rates. Methods: A two-year field experiment was conducted to investigate the effect of oat/sunflower intercropping and N application rates (0, 50, 100, and 150 kg ha−1) on yield advantages, N uptake, and CF. Results: The overall land equivalent ratio of oat/sunflower intercropping decreased from 1.33 to 1.07 with increasing N fertilization, which implies the potential N reduction to maintain crop yield. Without fertilization, the yield advantage of intercropping was 28–32% and 18–47% higher for oat and sunflower, respectively compared with corresponding monocultures. However, this yield advantage decreased with increasing fertilization, especially for oat. The border rows contributed more than one-third of the yield for intercropped oat without N fertilization, but their contribution decreased with increasing N fertilization. However, the contribution of border rows to intercropped sunflower yield was independent of N fertilization and remained around 69–75%. Overall, oat/sunflower relay strip intercropping maximizes the productivity by border row effects due to reduced N fertilization demand. Furthermore, intercropping decreased the CF relative to monoculture, especially without N fertilization. Conclusion: Intercropping can act as a win–win strategy for sustainable agriculture in Northwest China with higher productivity and lower carbon footprint.