Abstract The objective of this study was to investigate the growth and development of rice ( Oryza sativa L.) under the treatments of wheat ( Triticum aestivum L.) residue incorporation (RI) and nitrogen (N) fertilizer application. A mid-season japonica rice cultivar Yangjing 9538 was directly sown in field. Either in RI treatment or in the treatment with no residue return to field (R0), 3 nitrogen (N) fertilizer application levels were carried out, i.e., no N application, farmers' fertilizer practice (FFP), and site-specific N management (SSNM). The SSNM was based on chlorophyll meter readings in field. Compared with FFP, SSNM reduced N application by 30.0–31.3% and increased grain yield by 7.61% on an average. The average grain yield was 2.65% higher in the RI treatment than in the R0 treatment. Compared with the R0 or FFP treatment, the RI or SSNM treatment decreased stem and tiller numbers, leaf area index, and biomass accumulation at early growing period, but the differences were not significant after heading stage. RI was favorable for increasing the content of organic acid in leaves and enlarging the variations of temperature and relative humidity between day and night. The RI and SSNM treatments had positive effects on the percentage of productive tillers, photosynthetic rate of flag leaf, root activity, and ATPase activity during grain-filling stage.