Global food wastage equates to about 1.3 billion tons per year, which causes serious environmental impacts. The objective of this study was to evaluate the influences of addition of digestate from food waste in comparison to a synthetic liquid urea ammonium nitrate solution on plant growth, rhizosphere bacterial community composition and diversity, and hyphal abundance of arbuscular mycorrhizal (AM) fungi. Plant and soil samples were collected at 25, 50, and 75 days after seedling emergence. Annual ryegrass growth was significantly increased by both liquid urea ammonium nitrate and digestate, and digestate was just as effective as liquid urea ammonium nitrate. Additionally, digestate (50 kg N ha−1) significantly increased AM fungal hyphae density. Liquid urea ammonium nitrate (50 kg N ha−1) significantly decreased AM fungal hyphae density compared with liquid urea ammonium nitrate (25 kg N ha−1) at DAE 75. Digestate and liquid urea ammonium nitrate applications significantly shifted the bacterial community composition and OTU richness and changed the abundance of microbial C and N-cycling genes, while application rates had no significant effect. Structural equation modeling showed that digestate and UAN addition both directly and indirectly affected bacterial, C and N cycling genes community composition; the indirect effects were related to increased soil NO3 − content and reduced pH. This study showed that the use of digestate as a soil amendment can be environmentally effective and can provide a sustainable supply of nutrients that increases soil organic C. Moreover, the use of digestate can readily be incorporated into agricultural practices with potentially less impact on soil microflora diversity and function than conventional fertilizers.