Rice (Oryza sativa L.) is known to accumulate inorganic arsenic (iAs) and dimethylarsenate (DMA) in its grains, which threatens both human health and rice yield. Although schwertmannite, a metastable Fe (Ⅲ)-oxyhydroxysulfate mineral with extremely high adsorption capacity for iAs, has been proposed to remediate paddy soil to decrease As accumulation in rice, it remains unclear whether the phase transformation of schwertmannite would occur in flooded paddy soil and how its phase transformation changes the soil microbial processes that impact the accumulation of iAs and DMA in grains. Here, we found that amending As-contaminated paddy soil with 0.5%–1% (w/w) schwertmannite decreased the accumulation of iAs and DMA in grains by 37.41%–43.29% and 50.60%–73.89%, respectively, even though schwertmannite has transformed to goethite and secondary FeS was formed in both rhizosphere and bulk soils. The phase transformation of schwertmannite released a considerable amount of SO₄²⁻ into porewater, thereby increasing the abundances of both sulfate-reducing bacteria and the dsrB gene but decreasing the abundance of iron-reducing bacteria. This result suggested that schwertmannite phase transformation has promoted sulfate-reducing process and weakened iron-reducing process in flooded soil. Such promoted sulfate-reducing process and weakened iron-reducing process in paddy soil can decrease the reductive dissolution of As-bearing (oxyhydr)oxides, increase the formation of secondary FeS mineral for decreasing porewater As concentration, and strengthen the role of Fe plaque as a barrier for As absorption by rice. Additionally, the application of schwertmannite has decreased the abundance of arsM gene and weakened As methylation process in soil. Therefore, the effective decrease of iAs and DMA accumulation in rice grains by schwertmannite can not only be ascribed to the adsorption capacity of schwertmannite for As and the adsorption or incorporation of As by transformation products, but also contributed by the promoted sulfate-reducing process and the weakened iron-reducing process in flooded paddy soil.