How to achieve high soil organic carbon (SOC) sequestration and low greenhouse gases emissions but without compromising yields is the challenge of rice cultivation in China. This study explored the potential to simultaneously increase SOC stocks and reduce methane (CH4) emissions by optimizing rice cropping rotation and fertilization based on a 2-year field experiment in southeast China. We tested five optimized N management practices including directly reducing chemical N fertilizer input and replacing chemical N fertilizers with organic and controlled-release fertilizers in double-rice cropping and Chinese milk vetch-rice cropping rotation systems. Results showed higher seasonal rice yields, nitrogen use efficiency (NUE) and SOC stocks for Chinese milk vetch-rice rotation systems (CR) as compared to double-rice cropping systems (DR). Seasonal rice yields were the highest in the 2019 single-rice season (2019-SR), followed by the 2018 late (2018-LR) and early rice seasons (2018-ER). SOC stocks of CR for the treatment receiving organic N fertilizer (OF) were the largest among all rice seasons and fertilization treatments. Seasonal CH4 emissions were 8–12% greater in the OF than in the chemical N fertilizer treatments across all rice seasons, with the greatest in 2019-SR and lowest in 2018-ER. Fertilization stimulated CH4 emissions through enhancing mcrA gene activity, but regulated by soil properties, while rice rotation models indirectly influenced CH4 emissions through direct effects on soil properties. However, yield-scaled CH4 emissions remained unaffected by N fertilization in the two-year rice rotation systems. The NUE was significantly enhanced in OF than in other fertilizer treatments over all seasons. Seasonal net ecosystem C budget (NECB) was 24–41% greater in OF than in chemical N fertilizer treatments across all rice seasons, with the greatest in 2019-SR and lowest in 2018-LR. The NECB was increased by 46% in CR as compared to DR. Our results revealed that the optimized rice cropping rotation by incorporation of Chinese milk vetch with organic N fertilization is beneficial for enhancing soil C sequestration and maintaining rice yields in southeast China.