Rural domestic reclaimed water (RDRW) for agricultural irrigation is an effective way to alleviate the contradiction between the supply and demand of water. In this research, four kinds of irrigation water sources (primary and secondary treated water [R1 and R2], purified water [R3] and river water [CK]) and three kinds of water level regulations (low, medium and high water level control [W1, W2 and W3]) were set to study the impact of RDRW irrigation and its reuse on the properties of paddy soil, water and nitrogen utilization and yield of rice through a combination of field experiments and laboratory and numerical analysis methods. The results showed that compared with river water (CK) irrigation, pH (0–40 cm), electrical conductivity (EC) and organic matter (OM) content (60–80 cm) increased, and ammonium‐nitrogen (NH4+‐N) (0–20 cm) and nitrate‐nitrogen (NO3−‐N) (40–60 cm) content accumulated under RDRW irrigation. Under high water level regulation (W3), NH4+‐N and NO3−‐N content increased, showing the opposite changing trend compared with W1 and W2 regulations. With RDRW irrigation, water and nitrogen use efficiency and rice yield were significantly increased. Under RDRW irrigation, irrigation water use efficiency (IWUE), nitrogen use efficiency (NUE) and rice yield were increased by 48%–70%, 10%–22% and 5%–13%, respectively, compared with CK irrigation. In addition, path analysis established by structural equation modelling (SEM) showed that the irrigation water amount (IWA) had a significant positive impact on NUE and NH4+‐N but had a significant negative impact on IWUE and EC. NUE, IWUE, NO3−‐N and EC had a significant positive impact on yield. The path of IWA= > IWUE= > yield showed a complete mediation effect, the path of IWA= > EC= > yield and NUE= > EC= > yield both showed a partial mediation effect, and the effect size was 27.9% and 25.0%, respectively.