Abstract: In order to investigate the transformation processes of nitrogen in paddy field under water saving irrigation and controlled drainage, experiments of the water and nitrogen measurements were conducted during the rice growth period in 2007-2008. A water and nitrogen balance model was developed on the basis of first order dynamic response equation of physical process of nitrogen. The model was coupled with leakage and nitrogen uptake process and the water balance model in the paddy fields. It was applied with data obtained from two year experiments to simulate the daily water leakage. The daily amount of nitrate and ammonium in all nitrogen transformation process was also calculated. Results showed that 54.7% water of precipitation and irrigation was drained and leaked out of experiment field. The gas losses including volatilization and denitrification and leakage of nitrogen were dominating ways to lose nitrogen in paddy field under water saving irrigation and controlled drainage. The quantity of volatilization and denitrification accounts for 30.6% and 36.1% of nitrogen quantity respectively. Leakage of nitrogen was distinctly more than that of ammonium, while the surface drainage ammonium was more than nitrate. The amount of nitrogen leakage was also considerably high. The ratio of leakage ammonium to the corresponding form nitrogen quantity was 9.8% and that of nitrate quantity was 29.5%. Thus reducing gaseous nitrogen losses is beneficial to improve nitrogen use efficiency in paddy field under water saving irrigation and controlled drainage.