Abstract: The application of dredged sludge in agricultural soils has become a promising disposal and utilization method of sludge that improves soil properties and enhances plant productivity. A field experiment of rice (‘Wuyunjing 24’) cultivation was conducted in 2013 and 2014 with application of 20 kgm^-2 dredged sludge from a polluted river in Xiangcheng District, Suzhou City. In the field research, two levels of nitrogen (N) application LN, 120 kg(N)hm^-2; NN, 240 kg(N)hm^-2 were arranged to determine the effects of application of dredged sludge on physicochemical properties of soil, rice yield, heavy metals contents of rice grain and soil, and nitrogen use efficiency under different N application levels. The results showed that: 1) compared with no dredged sludge application (CK) treatment, field application of dredged sludge significantly increased soil organic matter and available nitrogen contents in paddy field at different growth stages of rice. Dredged sludge application significantly increased the contents of heavy metals (Cu, Zn, Pb) in soil, while it fell below the controlled plant standards for agricultural use. Field application of dredged sludge significantly increased rice yield by 7.05% (P < 0.01), the contents of Cu, Zn and Pb in rice grain by an average of 53.66% (P < 0.01), 18.71% (P < 0.01) and 802.29% (P < 0.01), respectively. Dredged sludge application improved nitrogen accumulation in rice, but reduced N use efficiency of rice biomass (NUEp) and N use efficiency of rice grain (NUEg). 2) High nitrogen supply increased soil organic matter, available nitrogen, rice yield and rice nitrogen accumulation under application of dredged sludge, but had no effect on the contents of heavy metals in soil and rice grain, while NUEp and NUEg showed the reverse trends. 3) The contents of heavy metals in the soil under dredged sludge treatment decreased by 5.0%, and in rice grain decreased by 7.27%12.65% in the second experimental season compared with that of the first experimental season. However, the contents of heavy metals in soil under dredged sludge treatment were still higher than that under CK treatment. 4) Most of the interactions between dredged sludge & N, dredged sludge & time, N & time, and dredged sludge & N & time had no significant effect on the contents of soil nutrients and heavy metals, rice yield, heavy metals in rice grain, and on nitrogen accumulation and nitrogen use efficiency of rice. It was therefore concluded that field application of dredged sludge increased soil nutrient, rice yield and heavy metals contents in rice grain and soil. However, nitrogen use efficiency showed the reverse trend.