Large areas of short-rotation eucalypt plantations are being established in south-western Australia on land previously used for agriculture. Options for maintaining soil N supply include retention of harvest residues and legume inter-cropping. We evaluated the effects of adding the residues of five legume species and Eucalyptus globulus leaves on inorganic N dynamics in two soils (a Rhodic Ferralsol or red earth and a Haplic Podzol or grey sand) using two modes of residue application in a laboratory incubation experiment (519 days). The time course of net N immobilisation and mineralisation in both soils was strongly influenced by the type and mode of application. Eucalypt leaves caused strong N immobilisation (-7 mg N g-1 residue-C) over the entire 519-day incubation, whereas for the legume species, N that was eventually immobilised at the start of the incubation, remineralised later to different degrees. Amongst the legumes, largest amounts of N were released from lupin residues (18 mg N g-1 residue-C) and lowest amounts from field pea (2 mg N g-1 residue-C). However, initial residue quality parameters were not significantly (P > 0.05) correlated with N release from the residues. Grinding and incorporating of the residues caused a much greater immobilisation of N than when residues were cut and surface applied. When ground residues were incorporated, immobilisation of N was more severe and endured for longer in the finer textured red earth than in the coarse textured grey sand. Where residues were surface applied, N dynamics were similar for both soil types. The results of this study suggest that legumes used as a mulch in eucalypt plantations are a readily available source of N for trees, and that the benefits from retention of harvest residues are more likely in maintaining soil N fertility on the long-term.