Crop residues returning meet the challenges of low fertility, poor structure, and low crop yields of dryland red soil in southern China. However, the rapid decomposition of crop residues led to a priming effect and increased soil mineralization. Biochar could effectively mitigate soil emission and combined with crop residues may further enhance soil improvement but still needs verification. A 365-day laboratory experiment was conducted to examine the impact of combining peanut shell with biochar on soil nutrient content, CO2 emission flux, and bacterial community in barren red soil. Six treatments were implemented: control (CK), low-dose peanut shell addition (S1), high-dose peanut shell addition (S2), and their corresponding combined biochar applications (BC, S1BC, and S2BC). (1) The addition of peanut shells (S1, S2) increased soil organic carbon and total nitrogen. The combined application of biochar (S1BC, S2BC) further enhanced these nutrient levels. Although available nutrient content decreased with peanut shell treatments, biochar incorporation mitigated the loss of available nitrogen. (2) Peanut shell addition alone increased cumulative CO(2 )emission flux, with S1 and S2 rising by 6.42% and 72.60%, respectively. However, the combined treatment with biochar resulted in reduced CO2 emission compared to CK, S1 and S2. Specifically, the cumulative CO2 emission for BC, S1BC, and S2BC decreased by 23.61%, 25.46%, and 6.50%, respectively. (3) Peanut shell addition significantly influenced soil bacterial community structure, especially at higher application rates. Combining biochar with peanut shell mitigated this impact on the community structure. Combining biochar and peanut shell mitigated the negative effects of using peanut shell alone and reduced available nitrogen loss, CO2 emission, and bacterial fluctuation, thus improving barren red soil effectively.