Nitrogen loss with the farmland drainage from the rice irrigation areas has been a great threat to the aquatic environment of the receiving water in southern China. In this present study, a systematic investigation was made to clarify the effect of different irrigation and drainage control strategies at the field level on ammonia nitrogen (NH3-N) reduction. The potential of pollutant reduction with the ditches and ponds was also proposed to meet the requirements of water quality in small agricultural watersheds. A case study was set in the Yanyun Irrigation Area along the Grand Canal in Yangzhou City, Jiangsu Province, China. A field experiment was performed on rice irrigation and drainage in two rice growing seasons. Some parameters were measured, including the soil properties, groundwater depth, and nitrogen concentrations of drainage flow in the field. The field hydrological model-DRAINMOD was used to simulate the different water management scenarios. A conceptual model was developed to predict the nitrogen reduction in the ditches and ponds under different irrigation and drainage management scenarios. The results showed that the annual drainage depth was as high as 1 162 mm, accounting for 59% of the total irrigation and rainfall depth under the current irrigation and drainage practice. The surface runoff depth accounted for 51% of the total drainage, including a 20% uncontrollable portion caused by storm events. A controlled irrigation strategy (or irrigating only when the field water level drops to -25 cm and no significant rainfall was forecasted) was significantly adopted to reduce the drainage and nitrogen losses: 55% reduction in the drainage and 59% reduction in the NH3-N, compared with the conventional practice. However, the controlled drainage presented a relatively low effect on drainage reduction and surface runoff. The total drainage remained nearly constant for the controlled drainage with the fixed irrigation volume under the current irrigation practice, indicating an increase in the surface runoff from 51% to 75%. The total drainage was reduced from 519 mm to 435 mm (16% reduction), whereas, the surface runoff increased from 35% to 56% under the controlled irrigation practice. The NH3-N concentration in the surface runoff (2.85 mg/L) was higher than that in the subsurface drainage (1.80 mg/L), indicating the significant increase of NH3-N losses with the increased surface runoff. Therefore, there were much higher volumes of irrigation and drainage water in the nitrogen reduction, in terms of the ditches and ponds distribution in the small agricultural watershed of the study area. Only when the drainage volume was significantly reduced using the controlled irrigation and drainage practice, the current ditches and ponds (15% of the farmland area) can be expected to gain lower ammonia nitrogen concentration level for the national water quality standards of Class V for surface water. Nevertheless, there is also an adverse impact on the NH3-N for the shallow depth (60 cm) of the drainage ditches, due to the increase in the surface runoff in the study area. In conclusion, the controlled irrigation of paddy fields can be more effective to reduce drainage and nitrogen losses. Consequently, the reduced amount of drainage water and the integrated management or optimization of the existing wetlands of ditches and ponds can greatly contribute to the water quality of rice irrigation areas in small agricultural watersheds