Field undisturbed tension-free monolith lysimeters and 15N-labeled urea were used to investigate the fate of fertilizer nitrogen in paddy soil in the Taihu Lake region under a summer rice-winter wheat rotation system. We determined nitrogen recovered by rice and wheat, N remained in soil, and the losses of reactive N (i.e., NH3, N2O, NO3−, organic N and NH4+) to the environment. Quantitative allocation of nitrogen fate varied for the rice and wheat growing seasons. At the conventional application rate of 550 kg N ha−1 y−1 (250 kg N ha−1 for wheat and 300 kg N ha−1 for rice), nitrogen recovery of wheat and rice were 49% and 41%, respectively. The retention of fertilizer N in soil at harvest accounted for 29% in the wheat season and for 22% in the rice season. N losses through NH3 volatilization from flooded rice paddy was 12%, far greater than that in the wheat season (less than 1%), while N leaching and runoff comprised only 0.3% in the rice season and 5% in the wheat season. Direct N2O emission was 0.12% for the rice season and 0.14% for the wheat season. The results also showed that some dissolved organic N (DON) were leached in both crop seasons. For the wheat season, DON contributed 40–72% to the N- leaching, in the rice season leached DON was 64–77% of the total N leaching. With increasing fertilizer application rate, NH3 volatilization in the rice season increased proportionally more than the fertilizer increase, N leaching in the wheat season was proportional to the increase of fertilizer rate, while N2O emission increased less in proportion than fertilizer increase both in the rice season and wheat season.