In this Letter, we propose a hybrid scheme to implement a photonic controlled-z (CZ) gate using photon storage in highly excited Rydberg states, which controls the effective photon-photon interaction using resonant microwave fields. Our scheme decouples the light propagation from the interaction and exploits the spatial properties of the dipole blockade phenomenon to realize a CZ gate with minimal loss and mode distortion. By excluding the coupling efficiency, fidelities exceeding 95% are achievable and are found to be mainly limited by motional dephasing and the finite lifetime of the Rydberg levels.