Excessive fertilization is often applied to produce rice. To reduce nitrogen loss and improve nitrogen use efficiency (NUE), we studied the effects of application depth (surface application, 5 and 10 cm) and shape of nitrogen fertilizers (row application and deep application of large granular fertilizer) on rice growth, soil N distribution and ammonia volatilization. The results showed that grain yield, shoot biomass and total dry biomass of the treatment with N in large granular fertilizer applied at 10 cm depth were significantly higher than those of all other treatments. Moreover, compared with the surface application, the N recovery efficiency and the N agronomic efficiency of deep application treatments were enhanced by 18.1–52.3% and 35.6–95.6%, respectively. Deep application significantly increased NH4+-N concentration at their fertilization points. During the growth season, N in large granular fertilizer treatments (mixed with clay to form an unusually large pellet of 1.0–1.5 cm in diameter) distributed closer to the roots, while N in other treatments, including row application treatments, was more widely distributed. Compared with the surface application, deep application significantly reduced NH3 volatilization and NH4+-N concentration in surface water by 58.7–64.8% and 26.0–72.5%, respectively. Furthermore, the NH3 volatilization from large granular treatment was 7.6–11.0% lower than that in the row application. In conclusion, applying N in large granular fertilizer at 10 cm depth reduces ammonia volatilization, and improves rice growth and grain yield, indicating improved NUE and lowered environmental risks.