Nitrogen leaching from agricultural soils is a major source of pollution for adjacent water systems. Biochar application to agricultural soils was reported to manageably reduce N leaching. For the sustainable use of biochar application, a mechanistic understanding of the changes in N leaching induced by biochar treatment is urgently needed. In this study, the effects of biochar [rice (Oryza sativa L.) chaff] application to rice paddy soil (sandy loam) on leaching and soil structure were investigated. Free‐draining lysimeters (0.2 m in diameter by 0.1 m in height) filled with 500 g of air‐dried soil were treated with biochar at 0, 2, and 10% application rates (BC0, BC2, and BC10, respectively) and N fertilizer (NH 4 Cl) at 0 and 100 kg ha−1 application rates (Fert0 and Fert100, respectively). During the 9‐wk incubation, the concentration of dissolved C in the leachates was higher in the soils treated with BC2 and BC10 compared with that treated with BC0 in the Fert0 soil while there were no significant differences among the biochar treatments in the Fert100 soil. This result indicated that the labile portion of the applied biochar C was utilized by microbes as the amended N was metabolized. Nitrate contents in leachates from the BC2 and BC10 treatments were significantly smaller than in those from the BC0 soil. Soil analysis showed that NH 4 + content decreased and NO 3 – content increased under BC10 treatment compared with BC0 treatment in the Fert100 soil, indicating that net N mineralization in the soil was enhanced under biochar treatment. We suggested that the NO 3 – retention in the biochar‐treated soil was related to increased soil aggregation. The C contents in the wet stable aggregates of size 53 to 1000 μm were significantly increased by biochar addition. This size fraction of aggregates is related to soil mesopores, which are involved in the soil's water holding. The water holding capacity (WHC) was higher in the BC2 and BC10 soils than in the BC0 soil, suggesting that application of rice chaff biochar to rice paddy soil could reduce N leaching through the redistribution of soil pores by forming more wet stable aggregates.