The annual total amount of crop residue straw exceeds billion tons in China. However, about 45%~60% of them are burnt or discarded, which not only wastes organic fertilizer source, but also pollutes the environment. Meanwhile, heavy use of nitrogen fertilizer has become a serious problem in rice production in this country. The purposes of this study were to investigate the effects of wheat straw incorporation to soil and site-specific nitrogen management (SSNM) on grain yield and quality of rice. With Yangjing 9538 as a material, rice yield and quality were evaluated under straw residue returned and different N management. The results showed that the yield was increased with all straw residue returned and lower nitrogen input. Stems and tiller numbers were decreased; spikelets per spike and ripened grains were improved under straw residue returned and N management (SSNM, applying nitrogen based on the timing, amount of nitrogen and values of chlorophy11 meter). The differences in the milling quality and nutrient quality of rice were not significant between straw returned and straw removed. Grains from the technique (straw residue returned and N management) had lower chalkiness and amylose content, longer gel consistency, indicating that appearance quality and cooking quality is improved. Peak viscosity and breakdown value were increased and setback value decreased under the technique, also suggesting that the eating quality of the rice grown is advanced. As the same, this technique promotes carbon remobilization from culms and sheaths to grains and NSC (non-structural carbohydrate) residue in the stems at heading stage increased, the reversed result was observed at maturity. The results showed that ATPase activity in the grains photosynthesis ratio and root activity were also improved in the process of grain filling under the technique. Reasons for the differences in the formation of grain yield and quality were discussed in the paper.