In this study, the effects of the application of nitrogen-fixing cyanobacteria under nitrogen reduction on rice yield, ammonia volatilization loss and nitrogen use efficiency in Phaeozem paddy field were studied by pot experiment, which included five treatments: 0N(no nitrogen fertilizer), 0.7N(70% nitrogen application rate), 1N (full nitrogen application), 0.7NDB (high temperature autoclaved nitrogen-fixing cyanobacteria combined with 70% nitrogen application rate), 0.7NB (fresh nitrogen-fixing cyanobacteria combined with 70% nitrogen application rate). The results showed that the grain weight of 0.7NB was not significantly different from that of 1N treatment, but 23.32% higher than that of 0.7N treatment. The apparent nitrogen use efficiency and agronomic nitrogen use efficiencyof 0.7NB were 1.2 times and 1.78 times higher than that of 0.7N, and increased by 48.00% and 35.57% than 1N treatment, respectively. At the level of 0.7N, the application of fresh nitrogen-fixing cyanobacteria decreased the ammonia volatilization rate and cumulative ammonia volatilization, while the application of high temperature autoclaved nitrogen-fixing cyanobacteria significantly increased the cumulative ammonia volatilization. In contrast to 1N, the ammonia volatilization rate and cumulative ammonia volatilization of 0.7NB and 0.7NDB decreased significantly, and the total cumulative ammonia volatilization was reduced by 66.80% and 37.36%, respectively. The results suggested that the application of fresh nitrogen-fixing cyanobacteria could replace 30% nitrogen fertilizer, sustain rice yield, reduce soil ammonia volatilization loss and improve nitrogen use efficiency.