Nitrogen (N) is an essential nutrient for citrus growth and development. Previously, we identified citrus as an ammonium (as NH4+-N or AN) sensitive plant; however, the mechanism underlying the changes in photosynthetic physiology in response to AN stress remain unclear. ‘Lugan’ (Citrus reticulata Blanco cv. Ponkan) citrus seedlings were sand cultivated in the presence of two forms of N (AN and nitrate as NO3−-N or NN), and three N levels (1, 4 and 8 mmol L−1, as N1, N4 and N8). Biomass, leaf N concentration per unit leaf area (LNC), gas exchange, relative chlorophyll value (SPAD), photosynthetic N use efficiency (PNUE), chlorophyll a fluorescence, reactive oxygen metabolism, and non-structural carbohydrates (NSC) were determined. Compared with NN, AN significantly inhibited the growth of citrus seedlings, accompanied by a reduced net photosynthetic rate at N4 and N8, as well as LNC at N4, with a concomitant decline in PNUE. Leaf NSC, SPAD, light energy absorption and trapping were remarkably elevated by AN, which damaged the oxygen-evolving complex and increased the heat dissipation, resulting in disruption of the photosynthetic electron transport chain. Moreover, increased superoxide anion, H2O2, and malonaldehyde content, and downregulated superoxide dismutase, peroxidase, and catalase activities were also observed in citrus leaves under AN. However, the severity of these adverse effects of AN in citrus plants increased with N levels. Overall, these results indicate that AN supply reduces PNUE by disrupting the photosynthetic electron transport chain, which inhibits the growth of citrus seedlings.