Soil microbial communities are critical for maintaining terrestrial ecosystems and fundamental ecological processes. Mercury (Hg) is a heavy metal that is toxic to microorganisms, but its effects on microbial community assembly and ecosystem multifunctionality in rice paddy ecosystems remain largely unknown. In the current study, we analyzed the microbial community structure and ecosystem multifunctionality of paddy soils across a Hg contamination gradient. The results demonstrated that Hg contamination significantly altered the microbial community structure. The microbial communities were predominantly driven by deterministic selection rather than stochastic processes. The random forest model and variation partition analysis demonstrated that the Hg level was the most important predictor of microbial profiles. Ecosystem multifunctionality decreased across the Hg concentration gradient, and multifunctionality was significantly correlated with soil biodiversity, suggesting that Hg-induced reductions in soil biodiversity led to reduced ecosystem services. A structural equation model showed that Hg contamination directly and indirectly affected ecosystem multifunctionality. The present work broadens our knowledge of the assembly of the microbiome in rice paddies across a Hg contamination gradient and highlights the significance of soil biodiversity in regulating ecosystem functions, especially in Hg-polluted rice paddies.