Abstract: The research aims at the threshold of nitrogen application amount in paddy soils. A field experiment was conducted to explore the effects of different N-fertilizer applications on the yield and N use efficiency of rice, dissolved total nitrogen (DTN) in soil surface water, soil nitrogen apparent surplus rate (SNASR) of soil in northern area of Erhai Lake from 2011 to 2012. The results show that there is a quadratic relationship between the nitrogen rate and the yield. The effect of nitrogen application on the increase of the yield is significant. However, when the nitrogen application rate is higher than 304.34 kg/ha, the rice yield is decreased. The nitrogen absorption in the shoots is significantly improved with the increase of nitrogen rates, while the nitrogen harvest index (NHI) is decreased. The coefficients of correlation between the nitrogen application rates and the values of DTN concentrations in the surface water during 9 days after the N application are more than 0.609**. When the nitrogen application rates in paddy soil are from 228.26 to 304.34 kg/ha, the yields are from 9969 to 10212 kg/ha, SNASR is from 50.05% to 79.65%, and the mean values of DTN concentrations in the surface water during 9 days after N application is from 78.40 mg/L to 108.58 mg/L. The recommended nitrogen application rates for rice is from 228.26 to 304.34 kg/ha to ensure the high yield, and the environment could be acceptable to a certain degree under present production conditions.