Ammonia (NH3) volatilization is a major loss of nitrogen fertilizer in paddy fields. The incorporation of straw or biochar has been considered to be the alternative options for soil improvement and agriculture sustainability. A field experiment was conducted to evaluate the potential role of rice straw and rice straw derived biochar in controlling NH3 volatilization according to the conventional nitrogen fertilizer level (urea, 270 kg N ha−1) during one rice (Oryza sativa L., cv. Xiushui134) growing season. Four treatments comprised rice straw at the rate of 8 t ha−1 (RS); rice straw derived biochar at the rate of 2.8 t ha−1 (RSBL); rice straw derived biochar at the rate of 22.5 t ha−1 (RSBH) and a control (CK). Compared to straw application, biochar incorporation reduced the cumulative NH3 volatilization (about 20%) from paddy fields significantly (p < 0.05), promoted rice yields and plant N aboveground as well as increased the abundance of ammoxidation amoA genes. In contrast with control, the ratios of NH3-N and total N input for RS, RSBL and RSBH declined significantly 4.15%, 4.40% and 11.12%, respectively (p < 0.05). Reduced NH3 volatilization in RSB treatments were mainly attributed to the decrease of NH4+-N concentration in the surface water, which could resulted from the enhancement of rice growth and the promotion of ammonia oxidation in soil. The increase of soil pH and soil CEC with biochar amendment played an important role on nitrogen retention and nitrogen cycle in soil. These results indicated that the incorporation of rice straw derived biochar instead of rice straw could be a promising approach to control NH3 volatilization and improve rice yield.