A recent transition in rice straw management, from open‐field burning to soil incorporation in combination with winter‐fallow flooding, has led to uncertainty in evaluating long‐term N fertility. A 2‐yr field study of 15N‐labeled fertilizer and crop residue was initiated in the fourth year of a rice straw management trial to examine the impacts of winter flooding and straw management on N fertilizer immobilization and crop uptake. After six seasons of residue incorporation and winter flooding, no effect on total soil C or N was observed. During the fifth and sixth year of the field study, microbial biomass C and N were greater for straw incorporation than for straw burned. Microbial biomass contained a sizable portion of soil‐recovered 15N fertilizer after the first (23%) and second (10%) crop season of the 15N study. The half‐life of the 15N in the biomass ranged from 0.55 to 0.87 yr. One year after 15N‐fertilizer application, greater recovery of 15N in the soil from straw incorporation versus burning (22.2 versus 18.7%) resulted in a slight increase in residual fertilizer N recovery in grain in the second growing season of the 15N study. Increased soil 15N recovery 1 yr after fertilizer application in the straw incorporation treatment, however, was offset by higher grain recovery of 15N in the burned treatment during the first growing season. Hence, the net result of these competing soil and plant sinks for fertilizer N led to similar 15N losses after 2 yr (50.3 ± 2.2%) under burned and incorporated straw. The cumulative effects of straw incorporation resulted in greater net N mineralization, an increase in microbial biomass N, and greater recovery of 15N in soil one year after application. Clearly, an active, labile N pool was formed when straw was incorporated that led to a reduction in fertilizer N dependency for rice.