Rapeseed (Brassica napus L.) has been cultivated for biodiesel production worldwide. Winter rapeseed is commonly grown in the southern part of Korea under a rice-rapeseed double cropping system. In this study, a greenhouse pot experiment was conducted to assess the effects of rapeseed residue applied as a green manure alone or in combinations with mineral N fertilizer on Cd and Pb speciation in the contaminated paddy soil and their availability to rice plant (Oryza sativa L.). The changes in soil chemical and biological properties in response to the addition of rapeseed residue were also evaluated. Specifically, the following four treatments were evaluated: 100% mineral N fertilizer (N100) as a control, 70% mineral N fertilizer + rapeseed residue (N70 + R), 30% mineral N fertilizer + rapeseed residue (N30 + R) and rapeseed residue alone (R). The electrical conductivity and exchangeable cations of the rice paddy soil subjected to the R treatment or in combinations with mineral N fertilizer treatment, N70 + R and N30 + R, were higher than those in soils subjected to the N100 treatment. However, the soil pH value with the R treatment (pH 6.3) was lower than that with N100 treatment (pH 6.9). Use of rapeseed residue as a green manure led to an increase in soil organic matter (SOM) and enhanced the microbial populations in the soil. Sequential extraction also revealed that the addition of rapeseed residue decreased the easily accessible fraction of Cd by 5–14% and Pb by 30–39% through the transformation into less accessible fractions, thereby reducing metal availability to the rice plant. Overall, the incorporation of rapeseed residue into the metal contaminated rice paddy soils may sustain SOM, improve the soil chemical and biological properties, and decrease the heavy metal phytoavailability.