Integrating Sesbania sesban (L.) Merill in the rice-wheat sequence was suspected to be beneficial in increasing crop productivity and soil fertility in subtropical India, but the suspected benefits were not confirmed by systematic investigation. Therefore, an investigation was carried out during 1994-95 to 1998-99. The experiment was laid out in a split-plot design with two cropping systems (pure cropping and alley cropping) as main plots and four N rates (0, 40, 80, and 120 kg N ha-1) as sub-plots. The results showed that in alley cropping, the rice-wheat sequence, lopping of S. sesban, and incorporating 5 t ha-1 yr-1 in the soil as green manure before rice and wheat planting added approximately 70 kg organic N ha-1 yr-1 which can replace 25% mineral fertilizer in the system. However, alleys of S. sesban, on an average reduced the productivity of rice and wheat by 0.37 and 0.43 t ha-1, respectively, over their pure cropping. Alleys of S. sesban provided about 2.75 t ha-1 yr-1 green matter and 1 t ha-1 yr-1 fuel wood and the system as a whole resulted in net saving of U.S. $55 ha-1 yr-1 along with benefit:cost ratio of 3.37 compared to pure cropping of the rice-wheat sequence. Soil physico-chemical analysis indicated that bulk density of soil decreased from 1.57 to 1.42 g cc-1, while infiltration rate increased from 0.58 to 2.17 mm h-1. The pH of the soil decreased from 8.5 to 8.1, whereas considerable build-up in organic C and available NPK was recorded in green manured plots of S. sesban under alley cropping.