Adoption of the innovative water-saving ground cover rice production system (GCRPS) based on transplanting of rice seedlings under high soil moisture conditions, resulted in an overall increase in grain yield compared to previous reports on GCRPS employing direct seeding. However, there is a lack of quantitative information on water and nitrogen use efficiency as affected by water and nitrogen management in GCRPS-transplanting. To close this knowledge gap, we conducted a two-year field experiment with traditional paddy rice (Paddy) and GCRPS-transplanting under two soil moisture conditions (GCRPSsat and GCRPS80%), combined with 3 nitrogen fertilizer management regimes (0, 150kg urea-N/ha as basal fertilizer for Paddy and GCRPS, 150kg urea-N/ha in 3 splits for Paddy or 75kg urea-N/ha plus 75kg N/ha as chicken manure for GCRPS). Grain yield, water and nitrogen use efficiency, stable isotope 13C of plant shoots and yield components were evaluated.The study showed: (1) compared to Paddy, both GCRPSsat and GCRPS80% produced significantly more grain yield, while no significant difference in grain yield was found between both GCRPS treatments. (2) Irrigation water use efficiency was increased by 140% in GCRPSsat and >500% in GCRPS80%, while total water use efficiency was improved by 52–96% as compared to Paddy. (3) δ13C of plant shoots was significantly higher in GCRPS than in Paddy, and showed significant positive correlations with total and irrigation water use efficiencies. (4) Compared to Paddy, agronomic N use efficiency was significantly higher in both forms of GCRPS. However, N recovery rates were only significantly higher in GCRPS than in Paddy when all urea nitrogen was applied as basal fertilizer before transplanting. With improved fertilizer N management, i.e., split N application in Paddy or combined application of urea and chicken manure in GCRPS, there were no significant differences. Overall, this quantitative evaluation of water use efficiency highlights that the use of GCRPS involving transplanting of seedlings has a great potential to reduce irrigation water input, increase grain yield and resource use efficiency.