Conventional tillage-based summer fallow winter wheat rotation practiced in the Columbia Basin has reduced soil organic matter and increased soil erosion. The Columbia Basin receives 75% of annual precipitation between October 1 and April 30. Conservation tillage decreases soil erosion, but little is known about the effect of direct-seeding on wheat production and economic returns. A field experiment comparing conventional tillage-based summer fallow with chemical summer fallow and direct-seeding was conducted from 1997 through 2004 at the Pendleton Experiment Station to study effects of tillage and nitrogen (N) fertilization rates on winter wheat (Triticum aestivum L.) yields and economic returns. Two sets of direct-seed plots were established, one in 1982 (NTa) and a second in 1997 (NTb); conventional tillage plots (CT) were also established in 1997. Wheat was fertilized at 0, 45, 90, 134, or 179 kg ha-1; all other practices were the same on the direct-seed plots. Conventional tillage plots received 0 or 134 kg N ha-1. Tillage system, N fertilization rate, and annual precipitation all affected wheat yield. Average wheat yields at the 134 kg N ha-1 fertilization rate were 5,845 kg ha-1 in the NTa plots, 5,980 kg ha-1 in the NTb plots, and 6,315 kg ha-1 in the CT plots. Variable input costs for chemical fallow averaged $88 ha-1 and $94 ha-1 for the tillage fallow plots. Conventional tillage wheat returned $537 ha-1 when 134 kg N ha-1 was applied compared to $465 ha-1 (90 kg N ha-1) and $462 ha-1 (134 kg ha-1) at the economically optimum N rate for the NTa and NTb plots, respectively. No government payments, crop insurance, fixed costs, or offsite costs were included in the analysis. The reduced economic return in the NT plots was due to reduced yield and increased crop production input costs.