Increasing nitrogen (N) application to croplands in order to support growing food demand is a major cause of environmental degradation. However, evaluations of suitable N application rates based on environmental benefit have rarely been carried out for paddy-rice at a national scale in China. To address this challenge, we investigated the current status of N management in 1531 counties, covering the primary agro-ecological regions of Chinese rice production in 2008, and conducted 12 field experiments with six N level practices for 3 years (2011–2013). Results showed that the highest yields for rice were 5.8–8.6 Mg ha−1 with N rates of 209.4–289.8 kg N ha−1. Compared with the N rate for the highest yield (YHN), the environmentally optimal N rate (EnON) was lower by 20–39% and the corresponding N loss was reduced by 21–45%, while ensuring 95–99% of the highest crop yield. In China, the N inputs to paddy fields exceeded the YHN and EnON rates by 10% and 45%, respectively. After adjusting the N rate to paddy fields to the EnON rate, the N amount used in China and the corresponding N lost would be reduced by 0.9 and 0.5 Tg N yr−1, respectively, which enable highly efficient production of food with the lowest N loss possible. Thus, we suggest that N use rates for 45% of rice paddy fields in China, for which N application rates exceed the EnON rate, need to be reduced to mitigate environmental damage, and this can be done while still meeting China’s food demand.