The cultivation of drip-irrigated rice has resulted in lower yields. However, the decrease in rice yield under drip irrigation and its relationship with the existing water and N regime have not been fully explained. Research and development of optimized water and N-management techniques are crucial for increasing rice yield under drip irrigation. In this study, two irrigation treatments were set: conventional drip irrigation (DIO) and drip irrigation with water stress (DIS). Each irrigation treatment contained four N rates: urea N 240 kg ha−1 (LN), urea N 300 kg ha−1 (MN), urea N 360 kg ha−1 (HN), and ammonium sulfate N 300 kg ha−1 (AN). The soil’s ammonium and nitrate contents were measured on the 2nd and 28th days after N application at panicle initiation stage. At anthesis, the aboveground and root biomass of rice were measured. In heading and maturity stage the N content of aboveground was measured and the yield, yield components, and NPFP were assessed at maturity stage. The results showed the following: (1) On the second day after N application, the contents of soil NO3−-N and NH4+-N in the 0–10 cm soil layer were highest for both the DIO and DIS. On the 28th day after N application, the soil NO3−-N content was highest at the 20–40 cm depth, while the soil NH4+-N content was still highest at the 0–10 cm depth. (2) The aboveground and root biomass in DIO treatment were significantly higher than in DIS. Furthermore, the root biomass at the 0–10 cm depth was significantly greater than at the 10–50 cm depth for both the DIO and DIS treatments. In the DIO treatment, the root biomass at the 10–50 cm depth was significantly higher with the HN and AN treatments compared to MN. However, in the DIS treatment, the root biomass at the 10–50 cm depth did not show significant differences between the MN, HN, and AN. (3) N accumulation in rice was significantly higher for the DIO treatment compared to the DIS treatment. Under the same irrigation treatment, the N accumulation in rice was highest in the AN and lowest in the LN. The PrNTA and PrNTC in DIS were significantly higher than in DIO, while the PoNAA and PoNAC were significantly lower in DIS. (4) The number of panicles, spikelets per panicle, seed-setting rate, 1000-grain weight, and grain yield were significantly lower in DIS. Under the DIS, these parameters were not significantly different among the MN, HN, and AN. In the DIO, the seed-setting rate, 1000-grain weight, and yield were not significantly different between the HN and AN, but were significantly higher than in the MN and LN. (5) NPFP was significantly higher in the DIO compared to the DIS. Among the different N rates, NPFP was highest with the AN treatment and lowest with the LN. In summary, under drip irrigation, there was a mismatch between soil mineral N and the distribution of rice roots, leading to reduced N accumulation and utilization in rice, ultimately impacting yield formation. Increasing N application and soil ammonium nutrition can improve rice yield under drip irrigation. However, optimizing N fertilizer management may not increase rice yield further when irrigation is further limited.