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Cultivated land is crucial to food security, social and economic stability, environmental quality, and sustainable urban–rural development in China and around the world. However, most of the current grading systems for evaluating cultivated land quality in China tend to generate homogeneous results and inadequate spatial descriptions mainly due to the use of a composite index method that often fails to recognize the matching relationship between land use needs and the quality of cultivated land. The purpose of this study is to propose a new grading system for evaluating China's cultivated land quality that involves two index systems and a scoring and grading scheme. In the proposed system, cultivated land quality is redefined in terms of production capacity quality and environmental quality, and the minimum limiting factor method and the weighted linear model are coupled for factor scoring and grading. The new system is demonstrated by a case‐study in Yimen Town, a loess plateau region in western China's Shaanxi Province. The results of this study clearly indicate that the new grading system is superior to the current system when compared using two methods: the spatial pattern comparison method and the crop performance validation method. The results are also favorable in terms of matching relationships between the subclasses of cultivated land quality versus soil types and landforms. The new grading system not only helps to better understand the cultivated land quality but also provides a clear direction for science‐based remediation and amelioration of cultivated land.