Previous studies demonstrated that ammonium nutrition results in higher water uptake rate than does nitrate nutrition under water stress, and thus enhances the tolerance of rice plants to water stress. However, the process by which water uptake is related to nitrogen form under water stress remains unknown. A hydroponic experiment with simulated water stress induced by polyethylene glycol (PEG6000) was conducted in a greenhouse to study the relationship between root aerenchyma formation and water uptake rate, such as xylem sap flow rate and hydraulic conductance, in two different rice cultivars (cv. ‘Shanyou 63’ hybrid indica and cv. ‘Yangdao 6’ indica, China). The results showed that root aerenchyma tissue increased in water-stressed plants of both cultivars fed by nitrate. No significant difference was found in root hydraulic conductivity and/or xylem sap flow rate between the two rice cultivars fed by ammonium regardless of water status, whereas these parameters decreased significantly in water-stressed plants fed by nitrate. It was concluded that aerenchyma that formed in the root cortex impeded the radial transport of water in the root cylinder and decreased water uptake in water-stressed rice plants fed by nitrate. Water transport occurred mainly through Hg-sensitive water channels in rice roots supplied with ammonium.