Hydrolysis and nitrification are the key steps of biological transformation of urea in soils, which control the loss of nitrogen (N) in terrestrial ecosystem. The inhibitory effects of plant materials on N transformation provide potential benefits for agricultural production and environmental protection. In this study, water-soluble and ethanol-soluble compounds were extracted from 24 tropical medicinal plant species in Hainan Island, southern China, with the aim of measuring their effects on urease activity (UA), nitrification potential (NP), and ammonium oxidizer number in a paddy soil, by a series of short (5 hours) and long-term (14 days) incubation experiments. Total solid yields and phenols contents of 48 medicinal plant extracts were also analyzed in this study. There were big differences in total solid yield and phenols content among the extracts of the selected tropical medicinal plant extracts. The phenols content of the plant extracts varied from 15.1 to 273.4 mg GAE/g extract (milligrams of gallic acid equivalents per gram of extract). A significant relationship between UA and NP of the soil treated with plant extracts and their phenols content was found, indicating that phenolic compounds are the major contributors to the inhibitory properties of these plants. Further studies indicated that the water extracts of Epimeredi indica aerial and Melia azedarach leaf, containing a high content of phenols, exhibited notable urease and nitrification inhibitory effects and reduced the number of soil ammonia–oxidizing bacteria, being promising sources of natural inhibitors for soil N transformation.