The application of straw and biochar to soil has received great attention because of their potential benefits such as fertility improvement and carbon (C) sequestration. The abiotic effects of these materials on C and nitrogen (N) cycling in the soil ecosystem have been previously investigated, however, the effects of straw or its derived biochar on the soil microbial community structure and function are not well understood. For this purpose, a short-term incubation experiment was conducted using 13C-labeled rice straw and its derived biochar (13C-labeled biochar) to deepen our understanding about soil microbial community dynamics and function in C sequestration and greenhouse gas emission in the acidic paddy soil amended with these materials. Regarding microbial function, biochar and straw applications increased CO2 emission in the initial stage of incubation and reached the highest level (0.52 and 3.96 mg C kg− 1 soil h− 1) at 1 d and 3 d after incubation, respectively. Straw amendment significantly (p < 0.01) increased respiration rate, total phospholipid fatty acids (PLFAs) and 13C-PLFA as compared to biochar amendment and the control. The amount and percent of Gram positive bacteria, fungi and actinomycetes were also significantly (p < 0.05) higher in 13C-labeled straw amended soil than the 13C-labeled biochar amended soil. According to the 13C data, 23 different PLFAs were derived from straw amended paddy soil, while only 17 PLFAs were derived from biochar amendments. The profile of 13C-PLFAs derived from straw amendment was significantly (p < 0.01) different from biochar amendment. The PLFAs 18:1ω7c and cy17:0 (indicators of Gram negative bacteria) showed high relative abundances in the biochar amendment, while 10Me18:0, i17:0 and 18:2ω6,9c (indicators of actinomycetes, Gram positive bacteria and fungi, respectively) showed high relative abundance in the straw amendments. Our results suggest that the function, size and structure of the microbial community were strongly influenced by the substrate composition and availability.