Hot pepper (Capsicum annuum L.) is a critical component of Ethiopian cuisine, widely consumed in both its green and red stages. Despite its importance, the productivity of hot pepper in the Amhara region remains suboptimal, primarily due to degraded soil fertility and the depletion of soil organic matter. To address these challenges, a two-year field experiment (2021/22–2022/23) was conducted in Jabithenan District to evaluate the impact of liquid bio-slurry (LBS) and nitrogen (N) fertilizer combinations on soil chemical properties and hot pepper yield. The study employed a randomized complete block design with six treatments: (1) control (no N), (2) recommended nitrogen (RN), (3)75% LBS + 25% RN, (4) 50% LBS + 50% RN, (5) 25% LBS + 75% RN, and (6) 100% LBS. Each treatment was replicated three times. Hot pepper seedlings (variety Mareko Fana) were transplanted into plots measuring 4.2 m × 3 m, with spacing of 0.3 m between plants and 0.7 m between rows. Soil samples were collected pre-planting and post-harvest to analyze particle size distribution, pH, total nitrogen, organic carbon, available phosphorus, and cation exchange capacity (CEC). Yield and yield components were also evaluated. Data were analyzed using ANOVA in SAS software. The results revealed that integrating LBS with RN significantly improved soil chemical properties and hot pepper yield. The 50% LBS + 50% RN and 25% LBS + 75% RN treatments exhibited superior performance, enhancing soil nutrient content and achieving higher yields compared to the control. These treatments also delivered the highest economic benefits, with a marginal rate of return exceeding 100%. Among the tested combinations, 50% LBS + 50% RN is recommended for farmers with access to sufficient LBS resources and livestock.