Organic and biological fertilizers are considered as a very important source of plant nutrients. A field experiment was conducted during 2017−2018 in paddy soil to investigate the effect of vermicomposting of cattle manure mixture with Azolla and rice straw on soil microbial activity, nutrient uptake, and grain yield under inoculation of N2-fixing bacteria. Experimental factors consisted of organic amendments at six levels (vermicomposts prepared from manure (VM); manure + rice straw (VRM); manure + Azolla mixture (VAM); manure + rice straw + Azolla mixture (VRAM); raw manure without vermicomposting (M), and a control) and N2-fixing bacteria at three levels (Azotobacter chroococcum, Azospirillum brasilence, and non−inoculation). The results showed that, vermicompost treatments compared to control and raw manure significantly increased the number and biomass−C of soil microorganisms, urease activity, number of tillers hill−1, phosphorus (P) and potassium (K) uptake, and grain and protein yield. Inoculation of plants with N2-fixing bacteria, especially Azotobacter increased the efficiency of organic amendments, so that the maximum urease activity, soil microbial activity, P and N uptake, and grain yield (4,667 (2017) and 5,081 (2018) kg/h) were observed in vermicompost treatments containing Azolla (VAM and VRAM) under inoculation with Azotobacter. The results of the study suggested that, using an organic source along with inoculation with appropriate N2-fixing bacteria for vermicompost has a great effect on enzyme activity, soil biology, nutrient uptake and grain yield has a synergistic interaction on agronomic traits under flooded conditions. Therefore, this nutrient method can be used as one of the nutrient management strategies in the sustainable rice production.