Non-point source (NPS) pollution from agricultural drainage has aroused widespread concerns throughout the world due to its contribution to eutrophication of water bodies. To remove nitrogen (N) and phosphorus (P) from agricultural drainage in situ, a Paddy Eco-ditch and Wetland System (PEDWS) was designed and built based on the characteristics of the irrigated rice district. A 2-year (2012-2013) field experiment was conducted to evaluate the performance of this system in Gaoyou Irrigation District in Eastern China. The results showed that the reduction in water input in paddy field of the PEDWS enabled the maintenance of high rice yield; it significantly increased irrigation water productivity (WPI), gross water productivity (WPG), and evapotranspiration water productivity (WPET) by 109.2, 67.1, and 17.6%, respectively. The PEDWS dramatically decreased N and P losses from paddy field. Compared with conventional irrigation and drainage system (CIDS), the amount of drainage water from PEDWS was significantly reduced by 56.2%, the total nitrogen (TN) concentration in drainage was reduced by 42.6%, and thus the TN and total phosphorus (TP) losses were reduced by 87.8 and 70.4%. PEDWS is technologically feasible and applicable to treat nutrient losses from paddy fields in situ and can be used in similar areas.