The positive effects of conservation agriculture (CA) (zero tillage with residue retention) on enhancing soil quality in rice-wheat system in the north-western Indo-Gangetic Plains of India are well appraised, but information is scanty for black soils (Vertisols) of central India. In the present study, soil organic carbon (SOC), soil aggregation, and biological properties of a vertisol in Jabalpur after imposing five treatments as: (i) transplanted rice-conventional tilled wheat (TPR-CTW), (ii) zero-tilled direct seeder rice-zero-tilled wheat-zero-tilled mungbean with residue (ZTDSR-S-ZTW-ZTMB + R), (iii) zero-tilled direct seeder rice-zero-tilled wheat-zero-tilled mungbean without residue (ZTDSR-S-ZTW-ZTMB), (iv) conventional tilled direct seeder rice-conventional tilled wheat-zero-tilled mungbean with residue (CTDSR-S-CTW-ZTMB + R), and (v) conventional-tilled direct seeder rice-conventional tilled wheat-zero-tilled mungbean without residue (CTDSR-S-CTW-ZTMB) were tested for four years in a fixed layout in each year. The macro-aggregate-associated C concentrations were by 13% and 17% higher (p < 0.05) in ZTDSR-S-ZTW-ZTMB + R than TPR-CTW in the 0-5 cm and 5-15 cm soil layers, respectively. However, ZTDSR-S-ZTW-ZTMB + R and PTR-CTW had similar micro-aggregated C concentrations and SOC stocks in both layers. Soil microbial biomass carbon, glomalin, and beta-D-glucosidase activity were significantly higher under ZTDSR-S-ZTW-ZTMB + R than TPR-CTW and increased by similar to 24%, similar to 59% and similar to 56% compared to TPR-CTW treatment in the 0-5 cm, respectively (p < 0.05). Availability of substrate, protection from mechanical impedance, and development of congenial micro-environment under ZTDSR-S-ZTW-ZTMB + R benefited the SOC sequestration and microbial function over PTR-CTW. Thus, CA-based management (ZTDSR-S-ZTW-ZTMB + R) had profound impact on soil aggregation, SOC content, and microbial functions in black soils within a short-period of time; however, the full potential can only be achieved in the long run.