We conducted incubation experiments with paddy soil collected from a long-term field experiment to explore the effect of Chinese milk vetch (Astragalus sinicus L., CMV) application on potential nitrogen (N) denitrification (PDA), nitrification (PNA), mineralization (PNM), soil chemical properties, microbial communities, enzyme activities, yields, and nutrient uptake of rice under different fertilization treatments. Five treatments were included: no chemical fertilizers (C₀), chemical fertilizers (C₁₀₀), Chinese milk vetch (M), CMV combined with 100% chemical fertilizers (MC₁₀₀), and with 80% chemical fertilizers (MC₈₀). Results showed that the M, MC₁₀₀, and MC₈₀ treatments significantly increased PNM and PNA compared with the C₁₀₀ treatment (P < 0.05). Meanwhile, the CMV application significantly increased total N, microbial biomass N, and carbon (C) concentrations, the abundances of the bacterial phylum Actinobacteria and the genera Bradyrhizobium, Mycobacterium, Streptomyces, and Reyranella, N-acetyl-glucosaminidase (NAG) activity, yields, and N nutrient uptake of rice grain compared with the C₁₀₀ treatment (P < 0.05). Correlation analyses indicated that grain yield and N uptake of rice, soil total N, microbial biomass C and N, the bacterial phylum Actinobacteria, the genera Bradyrhizobium, Mycobacterium, Streptomyces, Reyranella, and NAG were significantly correlated with PNM under different fertilization regimes, while microbial biomass C and N, Actinobacteria, Bradyrhizobium, and Reyranella were positively related to PNA (P < 0.05). Together, the application of CMV alone or in combination with chemical fertilizers can improve soil properties and rice growth, which may accelerate N mineralization and nitrification in this soil.