Applied phosphorus (P) use efficiency is generally low due to the low mobility of P in soil and its affinity to form insoluble complexes. Localized P application nearby the root zone is a potential approach to overcome this issue in crop production. However, the interaction with soil conditions is little understood, which results in less effective application of this approach. Using root-box experiments and changing P-retention capacity of soils, we revealed that applied P use efficiency of rice can be substantially improved by dipping seedlings in P-enriched slurry at transplanting (P-dipping) even in highly P-fixing soils. Spatial analysis of soluble P in soils indicated that P-dipping creates a P hotspot because the P-enriched slurry is transferred with seedling roots. The P hotspot could have induced vigorous surface root and facilitated further P uptake from the spot. In contrast, the effect of conventional P incorporation depended on P-retention capacity of soils; no increases in soluble P content in soils or plant P uptakes were observed when P-retention capacity was high. Our finding of significant interaction between localized P application and a specific soil property should help improving applied P use efficiency and achieving sustainable rice production against depleting P fertilizer resources.