Meeting the sustainable development of agriculture is a challenge as the yield is stagnant and the quality is declining under the extensive fertilization method with excessive nitrogen (N) input. Therefore, an improved nitrogen (N) application method was essential for the simultaneous improvement of rice yield and quality. This study explored the effects of different fertilization methods (CK: no N input, RN: urea with three-split broadcasting with recommended N rates, RON: organic-inorganic fertilizer with two-split broadcasting, RONSA: Azolla incorporated with the side-deep placement of organic-inorganic fertilizer) on rice yield and quality, rice root characteristics, and N use efficiency (NUE) in a 2-year field experiment in the Taihu Lake region, China, and N-15-labeled technique was used to investigate the fate of N-15 and protein synthesis in rice grains under different fertilization methods. Our results suggested that RONSA significantly increased rice yield, partial factor productivity of N input, and apparent N recovery efficiency versus RN, owing to the developed rice root system and enhanced N uptake in rice plants. Compared to RN, RONSA achieved higher eating and nutritional quality by reducing amylose content (by 18.02%) and increasing albumin (by 3.62%) and glutelin (by 9.70%) content. Furthermore, the markedly increased N-15 recovery efficiency and protein N-15 content indicated that RONSA markedly increased fertilizer N recovery and enhanced the uptake of fertilizer N to synthesize protein in rice grain. As an improved fertilization method, RONSA is promising to improve the eating and nutritional quality of rice while increasing rice yield and NUE. Investigating its effects on different rice cultivars and enhancing Azolla's resistance to adversity will help to promote the sustainable development of rice production in China.