In this paper the effects of Azolla inoculation on the growth of Spirogyra sp. and the variation in concentrations of nitrogen and phosphorus in flood-water in paddy field were studied by a field experiment. Under the same level of fertilization, the concentrations of total nitrogen and ammonium nitrogen in flood-water with Azolla application were less than those without Azolla application. During the tillering stage, the assimilation and release of phosphorous in soil-water could be modulated with Azolla application, which reduced the risk of phosphorous loss. In addition, chlorophyll content in flood-water with Azolla application changed little, ranging from 20 mg/m3 to 45 mg/m3, in contrast, chlorophyll content without Azolla application increased gradually and was much higher than with Azolla application after 3 to 5 days, up to 85 mg/m3, indicating that the development of Azolla could inhibit algal bloom.