Enhancing soil carbon sequestration in flooded agroecosystems is critical for promoting soil health, improving crop productivity, and mitigating climate change. This study evaluated the role of oxygen nanobubble (ONB)-loaded biochar, an emerging oxygenation and carbon management tool, in modulating soil organic carbon (SOC) dynamics and microbial activity in rice paddy soil. A pot experiment was conducted with treatments involving biochar, ONB-loaded biochar, and iron plaque induction. The results show that ONB-loaded biochar increased SOC by 11–19% compared to the control group. This enhancement was attributed to two primary mechanisms: (1) suppression of hydrolase activity, including β-glucosidase and acid phosphatase, resulting in reduced decomposition of labile organic matter; and (2) increased oxidase activity, which facilitated the oxidation of phenolic compounds and promoted the formation of recalcitrant C-Fe complexes. Additionally, enzyme stoichiometry and vector analysis revealed stronger microbial carbon limitation and phosphorus limitation in ONB-loaded biochar treatments, particularly during the tillering and maturing stages. The formation of Fe plaques on the roots further modulated these effects by altering redox conditions and nutrient availability. These findings highlight ONB-loaded biochar as a sustainable soil amendment to strengthen long-term SOC storage, modulate microbial nutrient dynamics, and enhance soil biogeochemical functions in rice agroecosystems. This approach offers promising implications for advancing climate-smart and environmentally sound soil management strategies.