Experiments were conducted to examine the dynamics of N transformation in soils treated with palm oil sludge (POS) and the N-supplying capacity of POS-urea treatments. The effects of these treatments on the N-uptake rate per unit root volume of oil palm (Elaeis guineensis Jacq.) seedlings were also studied. The linear least square method was used to study first-order kinetics of N mineralization potential (N0), the rate constant (K), and half-time (t1/2) in the treatments during 17 weeks of incubation. Soil amended with 15% POS and 0.01% urea gave the highest N0 (7252 ± 1280 ?g N g-1 of mixture), the lowest K (0.0094 ± 0.002 per week), and the highest t½ (75 ± 14 weeks). Application of higher doses of urea to 15% POS-amended soil resulted in decreased N mineralization. Greenhouse experiments revealed that high (>0.01%) urea with 15% POS-amended soil was detrimental to root and shoot growth of six-month-old oil palm seedlings. Pair-wise comparison using the least significant difference (LSD) test indicated that the leaf area of oil palm seedlings in the low urea treatment (0.01% urea with 15% POS) was significantly higher (LSD0.01 = 354.6; P < 0.01) than in other treatments. The highest net assimilation rate also resulted from the 0.01% urea-15% POS - soil mixture which ultimately produced enhanced growth and development of the oil palm seedlings.