This study aimed to improve nitrogen utilization and alleviate the inhibition of straw decomposition during early tillering and the growth of paddy after straw return. Specifically, three different nitrogen fertilizer (base fertilizer) application methods were tested under full straw return: applying the compound fertilizer once (J1), applying the compound fertilizer twice (J3) and applying the ammonium carbonate fertilizer plus compound fertilizer (J2). Full straw return without fertilizer (CK1) and no straw return without fertilizer (CK2) were used as the controls. The results showed that treatment with ammonium carbonate fertilizer combined with compound fertilizer (J2) significantly enhanced straw decomposition, light interception and dry matter accumulation at an early stage of tillering, but reduced tiller occurrence at a late tillering stage. Grain yield was affected due to reduced dry matter accumulation, nitrogen use efficiency and number of effective panicles. There were no significant differences in rice growth, nitrogen use efficiency and grain yield between the one-time or two-time compound fertilizer application methods. In contrast, treatment with ammonium carbonate fertilizer combined with compound fertilizer (J2) under full straw return effectively improved straw decomposition and accelerated the return of green and tillering. In addition, the proportion of ammonium carbonate fertilizer affected the nutrient utilization efficiency and yield at later stages.