The existing model of chemical fertilizer application faces challenges in improving grain yield and quality. Fragrant rice is known for its distinctive aroma and flavor, but it generally produces less grain compared to non-fragrant rice varieties. Limited research has been conducted on the potential of biochar fertilization as a solution for increasing grain yield in fragrant rice. In a two-year field trial conducted in 2022 and 2023, two fragrant rice cultivars, Meixiangzhan2 (MXZ2) and Xiangyaxiangzhan (XYXZ), were selected as experimental materials. These rice cultivars were exposed to four different rates of biochar fertilizer application: no application of fertilizer (T1); application of biochar fertilizer at a rate of 0.375 t ha− 1 (T2); application of biochar fertilizer at a rate of 0.75 t ha− 1 (T3); application of biochar fertilizer at a rate of 1.5 t ha− 1 (T4). The results showed that the grain yield of both cultivars increased to some extent in both 2022 and 2023 (8.57%−33.77% increase for MXZ2; 6.00%−21.59% increase for XYXZ). Furthermore, under the T2, T3, and T4 treatments, there was an increase in the number of effective panicle, seed setting rate, 1000-grain weight, biomass accumulation, net photosynthetic rate, and intercellular CO2 concentration. However, the transpiration rate and stomatal conductance decreased. The content of 2-acetyl-1-pyrroline (2-AP) increased with the increase in biochar fertilizer application, and the highest content was observed under the T4 treatment (153.54 − 178.32 µg kg− 1 in 2022; 163.93 − 180.28 µg kg− 1 in 2023). The activities of proline dehydrogenase (PDH) and 1-pyrrolin-5-carboxylic acid synthase (P5CS), as well as the contents of proline (PRO), 1-pyrrolin-5-carboxylic acid (P5C), ∆1-pyrroline, and methylglyoxal, also improved under the T2, T3, and T4 treatments compared to the T1 treatment. Moreover, the brown rice rate, milled rice rate, and head rice rate increased, while the chalkiness degree and chalk rice degree decreased under the T2, T3, and T4 treatments. Correlation analysis showed that grain yield was positively correlated with total biomass accumulation, the number of grains per panicle, and seed setting rate. Additionally, the content of 2-AP showed a positive correlation with PRO, P5C, ∆1-pyrroline, methylglyoxal, as well as the activities of PDH and P5CS. In conclusion, applying biochar at a rate of 1.5 t ha-1 can be more effective in increasing grain yield and 2-AP content in fragrant rice.