Intensive use of chemical fertilizer for crops may be responsible for nitrogen and phosphate accumulation in both groundwater and surface waters. The return flow polluted by nutrients not only results in the limitation of water reuse goals but also creates many environmental problems, including algal blooms and eutrophication in neighboring water bodies, posing potential hazards to human health. This study is to evaluate the N-fertilizer application of terraced paddy fields impacting return flow water quality. Water quality monitoring continued for two crop-periods around subject to different water bodies, including the irrigation water, drainage water at the outlet of experimental terraced paddy field, and shallow groundwater were conducted in an experimental paddy field located at Hsin-chu County, Northern Taiwan. The analyzed results indicate that obviously increasing of ammonium-N (NH4 +-N) and nitrate-N (NO3 −-N) concentrations in the surface drainage water and ground water just occurred during the stage of basal fertilizer application, and then reduced to relatively low concentrations (<0.1 mg/l and <3 mg/l, respectively) in the remaining period of cultivation. The experimental results demonstrate the potential pollution load of nitrogen can be reduced by proper drainage water control and fertilizer application practices.