Biogas projects have been promoted by the Chinese government in rural areas for several decades. However, these projects have proceeded slowly under the lack of biogas production technology. A circular agricultural experiment in combination with a local biogas promotion project was carried out in Jiangjiazhuang, a typical agricultural village in China, from 2008 to 2015. Agricultural production proceeded in an agricultural loop: “Crops → Grains/crop residues → Human/cattle → Human/cattle excreta → Biogas digester → Biogas/biogas residues → Domestic fuels/organic fertilizers → Crops.” The abundant crop residues were used as cattle forage to turn the biomass energy into human-edible food. Human/cattle dejecta was used as the substrate to produce biogas for livelihood energy. Biogas digester residues were used as organic fertilizers after composting to improve soil quality and crop yield. The results showed that the proportion of crop residues used for cattle forage increased from 1.3% in 2008 to 86.2% in 2015, while cattle population increased from 3 to 198. The proportion of biogas in total household energy increased from 1.1% in 2008 to 62.3% in 2015. Soil organic carbon increased under organic fertilizer application from 83.8 Mg C hm−2 to 213.5 Mg C hm−2. Our findings demonstrate that the promotion of circular agriculture may effectively enhance the utilization rate of biomass energy (crop residues) and reduce the consumption potential of fossil energy over 50%. Circular agriculture is a sustainable agricultural system that could improve the environmental conditions in rural areas.