Irrigated agriculture has grown rapidly over the last 50 years, helping food production keep pace with population growth, but also leading to significant habitat and biodiversity loss globally. Now, in some regions, land degradation and overtaxed water resources mean historical production levels may need to be reduced. We demonstrate how analytically supported planning for habitat restoration in stressed agricultural landscapes can recover biodiversity and create co-benefits during transitions to sustainability. We apply our approach in California's San Joaquin Valley where groundwater regulations are driving significant land use change. We link agricultural-economic and land use change models to generate plausible landscapes with different cropping patterns, including temporary fallowing and permanent retirement. We find that a large fraction of the reduced cultivation is met through temporary fallowing, but still estimate over 86,000 hectares of permanent retirement. We then apply systematic conservation planning to identify optimized restoration solutions that secure at least 10,000 hectares of high quality habitat for each of five representative endangered species, accounting for spatially varying opportunity costs specific to each plausible future landscape. The analyses identified consolidated areas common to all land use scenarios where restoration could be targeted to enhance habitat by utilizing land likely to be retired anyway, and by shifting some retirement from regions with low habitat value to regions with high habitat value. We also show potential co-benefits of retirement (derived from avoided nitrogen loadings and soil carbon sequestration), though these require careful consideration of additionality. Our approach provides a generalizable means to inform multi-benefit adaptation planning in response to agricultural stressors.