In grazed dairy pasture systems, a major source of NO3- leached and N2O emitted is the N returned in the urine from the grazing animal. The objective of this study was to use lysimeters to measure directly the effectiveness of a nitrification inhibitor, dicyandiamide (DCD), in decreasing NO3- leaching and N2O emissions from urine patches in a grazed dairy pasture under irrigation. The soil was a free-draining Lismore stony silt loam (Udic Haplustept loamy skeletal) and the pasture was a mixture of perennial ryegrass (Lolium perenne) and white clover (Trifolium repens). The use of DCD decreased NO3--N leaching by 76% for the urine N applied in the autumn, and by 42% for urine N applied in the spring, giving an annual average reduction of 59%. This would reduce the NO3--N leaching loss in a grazed paddock from 118 to 46 kg N ha(-1) yr(-1). The NO3--N concentration in the drainage water would be reduced accordingly from 19.7 to 7.7 mg N L-1, with the latter being below the drinking water guideline of 11.3 mg NL-1. Total N2O emissions following two urine applications were reduced from 46 kg N2O-N ha(-1) without DCD to 8.5 kg N2O-N with DCD, representing an 82% reduction. In addition to the environmental benefits, the use of DCD also increased herbage production by more than 30%, from 11 to 15 t ha(-1) yr(-1). The use of DCD therefore has the potential to make dairy farming more environmentally sustainable by reducing NO3- leaching and N2O emissions.