Rice is an important cereal crop cultivated in various soil types in Egypt. Furthermore, it is grown for multiple purposes, including export, consumption, and reclamation. In the agricultural sector, irrigated rice production is thought to use the most water, and growing water scarcity endangers this practice and this is a main sustainability challenge. One of the most popular irrigation techniques for saving water in flooded fields is alternate wetting and drying (AWD) which is considered a water management technique, practiced to cultivate irrigated rice with much less water than the traditional system. AWD irrigation system is a reliable and widespread water saving technology for rice production, moreover, it is a low-cost innovation that enables farmers to adapt to increasing water scarcity conditions, increase overall farm production efficiency, and mitigate greenhouse gas (GHG) emissions. Nitrogen (N) plays a vital role in maintaining rice production. Increasing N fertilizer applications has been a major measurement contributing significantly to crop yield improvement. The flooded conditions cause N to lose through surface runoff, leaching, and denitrification. AWD technology could also enhance rice growth, N absorption and accumulation, soil N transformation, nitrate content, ammonia-oxidizing bacteria abundance, and nitrate reductase activity. This review aims to evaluate AWD technology in water saving and sustaining rice production, nitrogen use efficiency (NUE), and GHG emissions particularly under climate change conditions and the challenges of water shortage. In addition to explaining the relationship of this technology to the soil N cycle to enhance the utilization of soil N under flooding conditions.