Nitrogen (N) priming is a microbially mediated biochemical process as affected by different incorporation practices. However, little information is known about the microbial mechanisms driving the response of N priming to co-operation of Chinese milk vetch (CMV, Astragalus sinicus L.) and different rates of chemical fertilizers in paddy soils in South China. Here, an anaerobic incubation experiment was conducted to study N priming effects (PE) and their relationships with soil microbial functional genes after CMV incorporation alone (M), co-incorporation of CMV with 100% (normal dosage) chemical fertilizers (MC100), and co-incorporation of CMV with 80% chemical fertilizers (MC80). Co-incorporation of CMV and chemical fertilizers enhanced the short-time scale (the first 20 d of incubation) positive PE of N, while no significant differences existed among the three treatments on day 60 or 90 of incubation (P > 0.05). Compared with the M treatment, gross priming effect (GPE) in the MC100 and MC80 treatments significantly increased by 34.0% and 31.3%, respectively, and net priming effect (NPE) increased by 47.7% and 47.8%, respectively, during the first 20 d of incubation (P < 0.05). This was likely attributed to soil nutrient availability and added substrate quality. The MC100 and MC80 treatments increased the gdhA gene abundance by 5.0% and 9.8%, increased the gdh2 gene abundance by 12.7% and 45.7%, and increased the nasB gene abundance by 9.5% and 41.4%, respectively, in comparison with the M treatment on day 20 of incubation. Correlation analyses indicated that soil microbial functional genes involved in N mineralization (gdhA and gdh2), assimilatory nitrate reduction (nasB), and nitrification (amoB) were significantly correlated with N priming under different incorporation practices during the incubation period (P < 0.05). Thus, co-incorporation of CMV and chemical fertilizers can regulate soil microbial community functional gene structure, which may accelerate mineralization and assimilatory nitrate reduction and inhibit nitrification, thereby increasing the short-term positive PE of N in the present study.