One of the most concerning global environmental issues is the pollution of agricultural soils by heavy metals (HMs), especially cadmium (Cd), which not only affects human health by taking Cd-containing foods but also impacts the quality of rice. The soil's nitrification and denitrification processes, coupled with the release of volatile organic compounds by plants, raise substantial concerns. The understanding of three aspects of paddy soil under conditions of heavy-metal pollution and water management is currently limited. In this review, we summarized recent literature related to the deleterious effects of Cd on both soil processes related to the N cycle and rice quality, particularly aroma, in different water management practices. Under both continuous flooding (CF) and alternate wetting and drying (AWD) conditions, cadmium (Cd) has been observed to reduce both nitrification and denitrification processes. The adverse effects are more pronounced in continuous flooding (CF) compared to alternate wetting and drying (AWD). Similarly, the alteration in rice aroma is more significant in AWD than in CF. The precise modulation of volatile organic compounds (VOCs) by Cd, remains unclear based on the available literature. Nevertheless, HM accumulation is higher in AWD conditions compared to CF, leading to a detrimental impact on volatile organic compounds (VOCs). The literature concluded that AWD practices should be avoided in Cd contaminated fields to decrease accumulation and maintain the quality of rice. In the future, rhizospheric engineering and plant biotechnology can be used to decrease the transport of HMs from the soil to the plant’s edible parts.