Nitrogen fertilizer is one of the major inputs in dryland cropping systems. An adequate nitrogen supply is required to optimise crop yield and quality factors such as protein content. However, excess, poorly timed or inefficient nitrogen application can lead to economic losses and to negative environmental impacts, such as greenhouse gas emissions and nitrate leaching. Improving nitrogen use efficiency can improve both the economics of production and environmental sustainability. Nitrogen fertilization for optimum crop yield provides the difference between nitrogen supplied from the soil and nitrogen demand of the crop. Crop nitrogen demand depends on the crop type, yield potential and protein goals. Nitrogen supply to the crop includes residual soil nitrogen and nitrogen mineralized during the growing season. Nitrogen supply from the soil and nitrogen needed by the crop are therefore both affected by environmental conditions, soil characteristics, crop type, crop sequence and management practices such as tillage, residue return, manure applications and past nitrogen management. For example, elimination of summer fallow and adoption of no-tillage management may increase crop removal of nitrogen, reduce residual reservoirs of nitrate and increase mineralization of nitrogen through the growing season. These changes will affect crop nitrogen and the ability to predict nitrogen supply from the soil. Understanding how past management will affect the nitrogen supply to the current crop will help match nitrogen fertilizer applications to crop needs. Applying the required amount of nitrogen in the most efficient manner available will help to reduce nitrogen fertilizer costs, while maintaining crop yield potential and crop quality. Traditional methods of improving nitrogen fertilizer efficiency include selection of a fertilizer source well-suited to the placement techniques used, selection of in-soil rather than surface placement, and application of fertilizer near the time of crop uptake. The relative performance of different methods of nitrogen placement can change, depending on environment and management practices. For example, adoption of no-till practices has been shown to increase the benefits obtained from in-soil banding of nitrogen fertilizer. Enhanced efficiency fertilizers, such as urease inhibitors, nitrification inhibitors or polymer coated products use chemical additives or physical coating to modify the release or chemical conversions of nitrogen. Controlling release or chemical conversion can restrict nitrogen loss by denitrification, volatilization or leaching. Controlled release products may be used to more closely match the availability of nitrogen in the soil to the crop uptake. Potential benefit from enhanced efficiency fertilizers will depend on the relative costs of modified and unmodified fertilizers as well as on the potential losses that would be prevented by use of the product. Therefore, assessment of the potential pathways and magnitudes of nitrogen loss can help identify the potential benefit from use of enhanced efficiency fertilizers.