Abstract: In order to determine the suitable nitrogen application rate in high yielding rice field and reduce the agricultural nonpoint source pollution caused by excessive input of agricultural chemical fertilizer in Taihu area, a field experiment was conducted to investigate the effects of nitrogen reduction on rice yield and nitrogen loss by surface runoff in a wheatrice double cropping system. The nitrogen application rate was based on the amount of nitrogen fertilizer applied to rice by local farmers. The rice cultivar of Wuyunjing 29 was grown. Five treatments included no nitrogen fertilizer (N0), local custom fertilization (N1), nitrogen reduction 10% (N2), nitrogen reduction 20% (N3), and nitrogen reduction 30% (N4). These treatments were all carried out with deep application of basic fertilizer by machinery and straw return. Rice yield of N2 treatment was roughly equivalent to that of N1 treatment because of former higher economic index. The total N loss of surface runoff of N2 treatment was reduced by 9.2% compared with that of N1 treatment. From N1 to N4 treatments, the total N loss rate was decreased, but there was no significant difference between N1 and N2 treatments. From the point of view of rice nitrogen partial loss rate, the amount of nitrogen loss in N2 treatment was the least per kilogram of rice. It is proposed that through the deep application of basic fertilizer by machinery and straw return, 10% nitrogen reduction based on local custom fertilization levels in Taihu area can significantly reduce total nitrogen loss via surface runoff and nitrogen partial loss rate of rice and thus keep the nitrogen loss rate at a low level in the paddy field while maintaining the yield of rice.