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A two-year lysimeter study was undertaken to compare the environmental effects (e.g. nitrate leaching and nitrous oxide emissions) of soil applied lactose-depleted dairy factory effluent (LD-DFE) with lactose-rich DFE. The aim of this experiment was to determine the fate of nitrogen from LD-DFE and dairy cow urine applied to a Templeton fine sandy loam soil (Udic Ustrochrept), supporting a herbage cover of ryegrass (Lolium perenne) and white clover (Trifolium repens). Measurements were carried out on the amount of nitrogen lost from the soil via leaching, lost by denitrification, removed by the pasture plants, and immobilized within the soil organic fraction. Further, a comparison between the fate of nitrogen in LD-DFE irrigated onto land under a "cut and carry" system, as opposed to a "grazed" pasture system was undertaken. Lactose-depleted dairy factory effluent was applied at three-weekly intervals during the summer months at rates of 25 and 50 mm, until nitrogen loading targets of 300 and 600 kg N ha⁻¹ yr⁻¹ had been achieved. Measured leaching losses of nitrogen averaged 2 and 7 kg N ha⁻¹ yr⁻¹ for Control 25 and Control 50 treatments; 21, 20 and 58 kg N ha⁻¹ yr⁻¹ for 25 and 50 mm "cut and carry" treatments respectively; and 96 kg N ha⁻¹ yr⁻¹ for the 25 mm "grazed" treatment. The range of nitrate-N leaching loss from LD-DFE plus urine is no different from the lactose-rich DFE nitrate leaching loss. Uptake of nitrogen by the growing pasture averaged 153, 184,340,352,483, and 415 kg N ha⁻¹ yr⁻¹ for Control 25, Control 50, LD-DFE 25 and LD-DFE 50 mm "cut and carry" treatments, and the LD-DFE 25 mm "grazed" treatment, respectively. Denitrification losses were 0.06, 4.4, 1.69, 19.70, and 7.4 kg N ha⁻¹ yr⁻¹ for Control 25, the LD-DFE 25 "cut and carry" treatments, the LD-DFE 25 mm "grazed" treatment, and calculated "paddock losses", respectively. Isotopic nitrogen studies found that 29.4 and 25.8% of applied LD-DFE nitrogen was immobilised in the LD-DFE 25 and LD-DFE 50 "cut and carry" treatments. The results of this experiment confirm the findings of the previous lactose-rich DFE study, in that the effects of grazing stock are of greater environmental concern than the removal of lactose from the effluent waste stream.