Mulching practices have been used to improve peach growth and production across the globe. However, the impact of mulching on the physiochemical properties and soil characteristics of orchards remains largely unknown. This study aimed to decipher the impacts of various mulching patterns on the soil environment and the quality of Prunus persica fruit in “Zijinhuangcui”. Three treatments were set up, which included black ground fabric mulch (BF) and two living grass mulch treatments (HV: hairy vetch and RG: ryegrass). The results showed that different mulching treatments have different effects on soil, plant growth, and fruit quality. Living grass mulch treatments, especially the HV treatment, significantly improved soil nutrients by enhancing nitrogen-related indicators. Of note, the BF treatment had higher total phosphorus and available phosphorus contents than the HV and RG treatments. The HV treatment had the highest relative abundance of Proteobacteria (33.49%), which is associated with symbiotic nitrogen fixation, followed by RG (25.62%), and BF (22.38%) at the young fruit stage. Similarly, the abundance of Terrimonas, which has a unique nitrogen fixation system at the genus level, was significantly higher in the living grass mulch (HV, 1.30–3.13% and RG, 2.27–4.24%) than in the BF treatment. Living grass mulch also promoted tree growth, increased fruit sugar content, sugar-related components, and sugar-acid ratio, and reduced the acid content. Collectively, the findings of this study show that living grass mulch can promote tree growth and improve fruit quality by improving soil fertility, bacterial diversity, and richness.