Nitrogen-fixing cyanobacteria play important roles in nitrogen cycling in paddy fields, but effects of their application on NH₃ volatilization reduction and nitrogen use efficiency enhancement are still unclear. In this study, 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 conducted by pot experiment, which included five treatments: no nitrogen fertilizer (0N); 70% nitrogen application rate (0.315 g/pot(105 kg/hm_-2⁾ N-0.7N), full nitrogen application (0.45 g/pot(150 kg/hm_-2⁾ N-1N), high temperature autoclaved nitrogen-fixing cyanobacteria combined with 70% nitrogen application rate (0.315 g/pot(105 kg/hm_-2⁾ N + high temperature autoclaved nitrogen-fixing cyanobacteria-0.7NDB), fresh nitrogen-fixing cyanobacteria combined with 70% nitrogen application rate (0.315 g/pot(105 kg/hm_-2⁾ N + fresh nitrogen-fixing cyanobacteria-0.7NB). The results showed that the grain weight of 0.7NB was not significantly different from that of 1N treatment, but 18.86% higher than that of 0.7N treatment. The apparent nitrogen use efficiency and agronomic nitrogen use efficiency (NAE) of 0.7NB were 1.2 times and 1.78 times higher than that of 0.7N treatment, respectively. Compared with the 1N treatment, the apparent nitrogen use efficiency and agronomic nitrogen use efficiency (NAE) of 0.7NB treatment were increased by 48.00% and 35.57%, respectively. At the level of 0.7N, the application of fresh nitrogen-fixing cyanobacteria could decrease 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 treatment, the ammonia volatilization rate and cumulative ammonia volatilization of 0.7NB and 0.7NDB treatment 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 part of nitrogen fertilizer, sustain rice yield, reduce soil ammonia volatilization loss and improve nitrogen use efficiency.