Clarifying the benefits of carbon sequestration and crop production of continuous green manure amendment is crucial for sustainable agricultural development. Here, using a long-term located experiment, we assessed the effects of 18 years’ ryegrass/milk vetch amendment with (NF, 150 kg N ha−1) or without nitrogen (N) fertilizer input (CK), on soil carbon management indices, paddy methane (CH4) emissions and rice yields. The results showed that green manure, rather than fertilization, played a critical role in soil CMI, increasing the carbon pool index but reducing the carbon management index. The increased soil organic carbon and the reduced labile organic carbon were the main causes for this performance. Additionally, the effects of both fertilization and green manure amendment on CH4 emissions were insignificant; however, fertilization significantly increased grain yield by 39.30% compared to CK. As a result, the methane emission intensity under fertilization treatment was notably lower than that from CK. The findings suggest that green manure amendment is a profitable manipulation for enhancing carbon sequestration without increasing paddy CH4 emissions. However, this cannot substitute the critical role of N fertilizer in rice production.