Liriope muscari is a medicinal and ornamental herbaceous plant with significant economic value, as its tuberous roots are used for medicinal purposes. However, the current production of medicinal plants is characterized by wasteful use of resources and ecological risks caused by the unreasonable application of nitrogen fertilizers. In this study, based on uniform application of phosphorus and potassium fertilizers, six nitrogen application levels were set in pot experiments (expressed as N): N0: 0 kg/ha, N1: 208.33 kg/ha, N2: 416.66 kg/ha, N3: 625 kg/ha, N4: 833.33 kg/ha, N5: 1041.66 kg/ha). The morphological characteristics, photosynthetic physiology, tuber yield and quality, and seven nitrogen fertilizer utilization indices of L. muscari were analyzed and measured. Correlation analysis and structural equation modeling (SEM) were employed to investigate the mechanism by which nitrogen influences its growth and development, photosynthetic characteristics, tuber yield and quality, and nitrogen fertilizer utilization efficiency. The results showed that (1) nitrogen significantly promoted plant height, crown width, tiller number, and chlorophyll synthesis, with the N3 treatment (625 kg/ha) reaching the peak value, and the crown width and tiller number increasing by 26.44% and 38.90% compared to N0; the total chlorophyll content and net photosynthetic rate increased by 39.67% and 77.04%, respectively, compared to N0; high nitrogen (N5) inhibited photosynthesis and increased intercellular CO2 concentration; (2) Fresh weight of tuberous roots, polysaccharide content, and saponin C content peaked at N3 (34.67 g/plant, 39.89%, and 0.21%), respectively, representing increases of 128.69%, 28.37%, and 33.66% compared to N0; (3) Nitrogen uptake, nitrogen fertilizer utilization efficiency, agronomic utilization efficiency, and apparent utilization efficiency were optimal at N3, while high nitrogen (N4-N5) reduced nitrogen fertilizer efficiency by 40-60%; (4) SEM analysis indicated that tiller number and transpiration rate directly drive yield, while stomatal conductance regulates saponin C synthesis. Under the experimental conditions, 625 kg/ha is the optimal nitrogen application rate balancing yield, quality, and nitrogen efficiency. Excessive nitrogen application (>833 kg/ha) induces photosynthetic inhibition and "luxury absorption", leading to source-sink imbalance and reduced accumulation of secondary metabolites. This study provides a theoretical basis and technical support for the precise management of nitrogen in Liriope-type medicinal plants. It is expected to alleviate the contradictions of "high input, low output, and heavy pollution" in traditional fertilization models.