Anhydrous ammonia is a cheaper source of nitrogen (N) fertiliser than granular urea for rice production, but it is not widely used in developing countries. It can only be applied pre-crop with any in-crop applications being applied in the form of urea. This 2-year study conducted in the Nile delta region of Egypt compared pre-crop anhydrous ammonia injected to a depth of 20 cm with broadcast urea as N sources for rice, along with 4 combinations of pre-crop ammonia and in-crop urea. Each treatment supplied a total of 165 kg N/ha. The rice crop was direct seeded rather than transplanted. The highest yields were achieved in the full anhydrous ammonia treatment, which yielded 53% more grain than the nil-N control, while the full urea treatment yielded 22% more than the control; most combination treatments were intermediate. The higher grain yield of the anhydrous ammonia treatment was through a higher panicle density per unit area and more filled grains per panicle. An economic analysis found that the anhydrous ammonia treatment had a net return 70–94% higher than supplying the same quantity of N as urea. Counts of bacteria, fungi and actinomycetes showed a decline by day 2 after injection of anhydrous ammonia, followed by an increase to numbers similar to or above pre-injection levels by day 5. The findings indicated that pre-crop anhydrous ammonia in rice is both economically promising and not deleterious to soil microbes.