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Rice accounts for 21% of the total energy content of the world's food and about 40% of the world's population depend on it. Nitrogen fertilization, mainly as urea, has played a major role in increasing rice production. But the fertilizer use efficiency is low. Therefore, the present investigation was undertaken to understand the effect of floodwater algae and green manure on the transformations of labelled urea applied to floodwater. The pertinent literature was reviewed. The experiments were carried out in the growth chamber using 4 to 5 cm soil columns covered with 4 to 5 cm floodwater. Algae growing in floodwater increased the pH of floodwater during the day and it cane back to its original level during the night. The magnitude of the daily increase in pH was influenced by the alkalinity and the pH of the floodwater. The application of green manure depressed this daily increase in floodwater pH. The production of 02 during photosynthetic activity increased the depth of the aerobic soil layer under the soil-water interface during the early period of algal growth but it was eliminated by subsequent settling of algae on the soil surface. The application of green manure eliminated the aerobic soil layer even in the presence of algae. Algae growing in floodwater increased urea hydrolysis. Large quantities of applied N assimilated by growing algae resulted in lower total gaseous losses of applied N. The application of urea in floodwater where algae was already growing enhanced NH3 volatilization and denitrification. A large portion of N assimilated by algae can mineralize and be available to the same crop and this mineralization is further enhanced by the exclusion of light by the crop canopy. When urea was applied 17 days after incorporation of green manure it increased urea hydrolysis significantly but urea hydrolysis was not effected when urea was applied immediately after incorporation. Application of green manure caused less nitrification and subsequent denitrification which encouraged NH3 volatilization. Further investigation is needed to confirm these findings when growing rice plants are present.