To evaluate the effect of different nitrogen and potassium rates and their interaction on rice yield, a factorial experiment with a RCB design and 3 replications, was conducted in Rice Research Institute of Iran during 2001- 2003. Nitrogen with 5 levels of 0, 30, 60, 90 and 120 kg ha^-1 from urea source and potassium with 4 levels of 0, 100, 200 and 300 kg K2O ha^-1 were 2 investigated factors. All fertilizers have been basally broadcasted on soil surface and mixed with 5 cm of soil just before transplanting. Khazar rice variety seedlings were transplant in 25*25 cm spaces after fertilizing. The results have shown that different nitrogen fertilizer rates had significant effects on grain yield, rice straw yield and total dry matter in all years. The rate of 60 kg N ha^-1 has produced the maximum grain yield in the first year while in the second and third years, the maximum grain yields were observed in 90 kg N ha^-1 treatment. However, in all 3 years, the increase of application of nitrogen fertilizer up to 120 kg ha^-1, tended to increase straw and total dry matter. The results have also shown that although rice straw and total dry matter were increased as N fertilizer application increased, harvest index decreased inversely. Except in the last year, potassium had no significant effect on grain yield, and its interaction with nitrogen did not increase the effect of nitrogen application on rice yield. Key words: Nitrogen, Potassium, Nitrogen and Potassium interaction, Khazar rice variety.