Ethylene increases root cortical aerenchyma formation in maize (Zea mays L.), rice (Oryza sativa L.) and other species. To further investigate the effects of nitrate, ammonium and water stress on ethylene production and aerenchyma formation in roots, two lowland rice cultivars (Shanyou 63, hybrid indica, and Yangdao 6, inbred indica) were cultured hydroponically with 10% (w/v) polyethylene glycol to simulate water stress. Water stress decreased shoot biomass, stomatal conductivity and leaf water potential in cultivars fed with nitrate but not with ammonium. Water stress induced more aerenchyma formation in cultivars fed with nitrate rather than ammonium, and increased cortical aerenchyma was found in Yangdao 6. Endogenous ethylene production by roots increased significantly under water stress in plants fed with nitrate rather than ammonium. Exogenous ethylene stimulated root cortical aerenchyma formation. Expression of the ethylene biosynthesis gene 1-aminocyclo-propane-1-carboxylic acid (ACC) synthase (ACS5) was greater in roots fed with nitrate rather than ammonium in the presence and absence of water stress. The expression of ethylene signalling pathway genes involved in programmed cell death (lesion-simulating disease (L.S.D.)1.1 and L.S.D.2; enhanced disease susceptibility (EDS) and phytoalexin-deficient (PAD4)) were regulated by the N form and water stress. In plants of cultivars fed with ammonium, L.S.D.1.1 expression increased under water stress, whereas L.S.D.2, EDS and PAD4 expression decreased. In conclusion, nitrate increases ethylene production and cortical aerenchyma formation in roots of water-stressed lowland rice. However, ammonium increased L.S.D.1.1 expression in water-stressed roots, and decreased ACS5, EDS and PAD4 expression, which would inhibit ethylene production and aerenchyma formation.