The excessive use of synthetic nitrogen (N) fertilizers in rice (Oryza sativa L.) has resulted in high N loss, soil degradation, and environmental pollution in a changing climate. Soil biochar amendment is proposed as a climate change mitigation tool that supports carbon sequestration and reduces N losses and greenhouse gas (GHG) emissions from the soil. The current study evaluated the impact of four different rates of biochar (B) (C/B0-0 t ha−1, B1-20 t ha−1, B2-40 t ha−1, and B3-60 t ha−1) and two N levels (N1; low (270 kg N ha−1) and N2; high (360 kg N ha−1)), on rice (cultivar Zhenguiai) grown in pots. Significant increases in the average soil microbial biomass N (SMBN) (88%) and carbon (87%) were recorded at the highest rate of 60-ton ha−1B and 360 kg N ha−1 compared to the control (N1C) during both seasons (S1 and S2). The photochemical efficiency (Fv/Fm), quantum yield of the photosystem (PS) II (ΦPS II), electron transport rate (ETR), and photochemical quenching (qP) were enhanced at low rates of biochar applications (20 to 40 t B ha−1) for high and low N rates across the seasons. Nitrate reductase (NR), glutamine synthetase (GS), and glutamine 2-oxoglutarate aminotransferase (GOGAT) activity were, on average, 39%, 55%, and 63% higher in the N1B3, N2B2, and N2B3 treatments, respectively than the N1C. The grain quality was higher in the N1B3 treatment than the N1C, i.e., the protein content (PC), amylose content (AC), percent brown rice (BRP), and percent milled rice (MRP) were, on average, 16%, 28%, 4.6%, and 5% higher, respectively in both seasons. The results of this study indicated that biochar addition to the soil in combination with N fertilizers increased the dry matter (DM) content, N uptake, and grain yield of rice by 24%, 27%, and 64%, respectively, compared to the N1C.