One of the most concerning global environmental issues is the pollution of agricultural soils by heavy metals (HMs), especially cadmium, which not only affects human health through Cd-containing foods but also impacts the quality of rice. The soil’s nitrification and denitrification processes, coupled with the release of volatile organic compounds by plants, raise substantial concerns. In this review, we summarize the recent literature related to the deleterious effects of Cd on both soil processes related to the N cycle and rice quality, particularly aroma, in different water management practices. Under both continuous flooding (CF) and alternate wetting and drying (AWD) conditions, cadmium has been observed to reduce both the nitrification and denitrification processes. The adverse effects are more pronounced in alternate wetting and drying (AWD) as compared to continuous flooding (CF). Similarly, the alteration in rice aroma is more significant in AWD than in CF. The precise modulation of volatile organic compounds (VOCs) by Cd remains unclear based on the available literature. Nevertheless, HM accumulation is higher in AWD conditions compared to CF, leading to a detrimental impact on volatile organic compounds (VOCs). The literature concludes that AWD practices should be avoided in Cd-contaminated fields to decrease accumulation and maintain the quality of the rice. In the future, rhizospheric engineering and plant biotechnology can be used to decrease the transport of HMs from the soil to the plant’s edible parts.