Fertiliser nitrogen use in Australia has increased from 35 Gg N in 1961 to 972 Gg N in 2002, and most of the nitrogen is used for growing cereals. However, the nitrogen is not used efficiently, and wheat plants, for example, assimilated only 41% of the nitrogen applied. This review confirms that the efficiency of fertiliser nitrogen can be improved through management practices which increase the crop’s ability to compete with loss processes. However, the results of the review suggest that management practices alone will not prevent all losses (e.g. by denitrification), and it may be necessary to use enhanced efficiency fertilisers, such as controlled release products, and urease and nitrification inhibitors, to obtain a marked improvement in efficiency. Some of these products (e.g. nitrification inhibitors) when used in Australian agriculture have increased yield or reduced nitrogen loss in irrigated wheat, maize and cotton, and flooded rice, but most of the information concerning the use of enhanced efficiency fertilisers to reduce nitrogen loss to the environment has come from other countries. The potential role of enhanced efficiency fertilisers to increase yield in the various agricultural industries and prevent contamination of the environment in Australia is discussed.