Biogas effluent (BE) is a potential source of fertilizer for rice. Alternate wetting and drying (AWD) irrigation based on surface water level can increase rice grain yield (GY), but its effect under BE application is still unclear. To test whether AWD can increase GY under BE application, we conducted a mesocosm experiment under screen-house conditions in Can Tho, Vietnam. We measured rice growth and yield under three nitrogen (N) treatments—zero-N (Z), synthetic fertilizer (SF), and BE—and two irrigation regimes—continuous flooding (CF) and AWD with a re-irrigation threshold of 15 cm below the soil surface. Chlorophyll content (SPAD) and leaf color chart (LCC) values were higher in SF than in BE, but plant height was comparable. Although GY was not significantly different between CF and AWD, AWD increased it by 12% in BE relative to CF. All N use efficiency (NUE) indices (apparent N recovery, agronomic NUE, and internal NUE) were comparable between AWD and CF in BE and SF. The results indicate that AWD irrigation is feasible under the application of cattle BE and the combination can improve rice GY.