In paddy fields, overuse of nitrogen fertilizer to maximize yields can lead to excessive economic loss and degradation of the environment. Therefore, studying the effects of urea–chitosan nanohybrid as a slow released source of nitrogen fertilizer on rice cultivation was the aim of our study. The effects of fertilization applications, namely: CU: control treatment; U1: application of a full recommended dose of classical urea (165 kg N ha−1); U2: adding recommended dose of classical urea by 80% + exogenous urea–chitosan nanohybrid 250 mg N/L; U3: adding recommended dose of classical urea by 80% + exogenous urea–chitosan nanohybrid 500 mg N/L; U4: adding recommended dose of classical urea by 60% + exogenous urea–chitosan nanohybrid 250 mg N/L; U5: adding recommended dose of classical urea by 60% + exogenous urea–chitosan nanohybrid 500 mg N/L; U6: adding recommended dose of classical urea by 40% + exogenous urea–chitosan nanohybrid 250 mg N/L; and U7: adding recommended dose of classical urea by 40% + exogenous urea–chitosan nanohybrid 500 mg N/L on growth indicators, yield-related components, grain productivity, and N uptake status of rice plants were investigated during two successive seasons. As a result, significant achievements concerning growth, yield and yield-related traits were obtained when rice plants were fertilized with exogenous urea–chitosan nanohybrid (i.e., 500 mg N/L) + 60% classical urea without a significant decline in the studied traits compared to the full recommended dose of classical urea. Accordingly, this investigation revealed that chitosan nanohybrid at 500 mg N/L as a compensatory alternative can be used in saving 40% of classical urea requirement.