Cadmium (Cd) is one of the main pollutants in paddy fields and its accumulation in rice (Oryza sativa L.) and subsequent transfer to food chain is a global environmental issue. This paper reviews the toxic effects, tolerance mechanisms, and management of Cd in a rice paddy. Cadmium toxicity decreases seed germination, growth, mineral nutrients, photosynthesis and grain yield. It also causes oxidative stress and genotoxicity in rice. Plant response to Cd toxicity varies with cultivars, growth condition and duration of Cd exposure. Under Cd stress, stimulation of antioxidant defense system, osmoregulation, ion homeostasis and over production of signalling molecules are important tolerance mechanisms in rice. Several strategies have been proposed for the management of Cd contaminated paddy soils. One such approach is the exogenous application of hormones, osmolytes and signaling molecules. Moreover, Cd uptake and toxicity in rice can be decreased by proper application of essential nutrients such as nitrogen, zinc, iron and selenium in Cd contaminated soils. In addition, several inorganic (liming and silicon) and organic (compost and biochar) amendments have been applied in the soils to reduce Cd stress in rice. Selection of low Cd-accumulating rice cultivars, crop rotation, water management and exogenous application of microbes could be a reasonable approach to alleviate Cd toxicity in rice. To draw a sound conclusion, long-term field trials are still required, including risks and benefit analysis for various management strategies.