We investigated the soil and soil water chemistry in abandoned terraced paddy fields (reed stand) and a thicket of deciduous broad-leaved trees (thicket stand) on the same slope in Sado Island, Japan. The soils gathered from these plots were incubated under different water conditions to examine the dynamics of dissolved ions. The organic carbon pool in the soil in the reed stand at the lower slope position was greater than the thicket stand at the middle slope position. The high concentration of base cations and an almost neutral pH of the soil water at the reed stand corresponded with the high exchangeable cation concentrations and base saturation in the soil. These results reflect the mineral-rich groundwater percolating down the slope, which may be produced by chemical weathering. An in situ sulfate reduction in the reed stand at deeper soil horizons was identified. The different water conditions in the incubated soils affected the soil pH(H2O), transformation of Fe, and dominant anions (NO3−, HCO3−, and SO42−). These biogeochemical processes were more conspicuous in the reed stand at the lower slope position where the concentrations of organic matter and base cations were high. When the abandoned terraced paddy field is developed for the conservation of the Japanese crested ibis (Nipponia nippon) habitat in Sado Island, the reductive subsoil at the lower slope position should be kept waterlogged to limit sulfuric acid generation.