Abstract: Under the research of nitrogen transformation of the application of controlled release fertilizer and urea fertilizer into rice paddies, in the red soil hilly fields of southern Hunan for two consecutive years (2002—2003), with a systemic field observation combined with real time analysis, the results showed that the ammonia volatilization is the main reason of nitrogen loss. The application of Urea made the ammonia volatilization losses amounted to 39.28% of total nitrogen. While the application of controlled release fertilizer (LCU70. LCU50), made the ammonia volatilization losses of volume accounted for 19.99% and 10.91% of total nitrogen separately, which were 19.29%~28.37% lower than Urea Nitrogen ammonia volatilization loss.The concentration of NH4-N in field surface water peaks in the first days after fertilization, and drops to the comparison level in 10 days. The ammonia volatilization in the field peaks in the third days after fertilization, and drops to the comparison level in 7 days. Unde the application of controlled-release fertilizer (LCU70, LCU50), the nitrogen absorptivities of rice are 80.5% and 64.7%, respectively, which are 50.5 and 34.7% higher than that of urea, the difference is significant.