Annual rice-wheat cropping system occupies about 10 million ha in India. Increased crop yields have led to greater quantities of crop residues at harvest. Asian farmers typically lack appropriate techniques to handle increasing quantities of residues, particularly of rice straw in machine-harvested areas. Presently, rice straw left in the field in machine-harvested areas is being burnt in situ to clear the fields resulting in loss of soil organic matter and nutrients besides causing environmental pollution. Efficient management of crop residues is perhaps the foremost challenge facing the intensive rice-wheat producing regions in Asia. To date very little information is available on the effect of tillage and rice straw management on yield and N use efficiency in wheat following rice. Zero till establishment has been recommended for wheat following rice in the IGP of India. The high residue load hinders in the use of zero-till seed drills due to clogging of the machinery with loose straw. A novel recent approach with promise is the “Happy Seeder”, which combines the straw mulching and seed drilling functions into one machine. Field experiments were conducted for four years (2001 to 2005) on a sandy loam and for two years (2003 to 2005) on loam soil to evaluate the effect of tillage and rice straw management (rice straw burned + conventional tillage, rice straw burned +zero tillage, rice straw incorporated in situ + conventional tillage and rice straw mulched + zero-tillage) in the main plots and four N rates (0, 80, 120 and 160 kg N ha^-1)in sub-plots on crop yields and N use efficiency in wheat. In case of loam soil, rice straw was removed from the field in stead of its in situ burning, but the other treatments were similar on the two soils. Residual affect of treatments applied to wheat was studied in the following puddled transplanted rice which received uniform application of 120 kg N ha^-1.The mass loss of rice straw in nylon mesh bags during the first 30 days was 10 % of the initial mass for surface-placed and 20% for deep-placed (10 cm depth), and 60 % and 81% during 140 days on sandy loam, respectively. Initial wheat growth (at 52 DAS) was significantly reduced with straw mulching compared with straw burning or straw incorporation, irrespective of N treatments but the dry matter accumulation at 92 DAS was significantly higher in straw mulch compared with other treatments on sandy loam. This was due to slow rates of soil N mineralization observed under zero-till plots compared with under conventional till plots during the initial four weeks. Mineral N content in 0-45 cm soil layers measured at 58 and 116 days after seeding under 120 kg N ha^-1 did not differ among tillage and straw management treatments on sandy loam. Grain yield of wheat was not significantly affected by tillage and straw management on both the soils. Response of wheat to fertilizer N application was observed up to 160 kg N ha^-1 on sandy loam and 120 kg N ha^-1 on loam, irrespective of tillage and straw management. Straw yield of wheat was significantly lower on zero-till plots where rice straw removed during both the years on loam soil. The N use efficiency was lower on zero-till plots when straw was either burned or removed compared with straw incorporation and straw mulch treatments, particularly at low N rates on both soils. Grain yield of following rice was not influenced by the tillage and straw management treatments applied to wheat on sandy loam. But grain yield of rice was significantly lower where rice straw was removed than when it was retained, particularly at low N rates applied in preceding wheat. Mineral N content in 0-45 cm soil layers measured at 58 and 116 DAS under 120 kg N ha^-1 did not differ among tillage and straw management treatments. Retention of rice straw, compared with straw burning caused a small increase in the soil organic carbon levels in the surface 0-75 mm layer four years after straw incorporation due to rapid carbon turn over rates. Availability of K in the surface 0-75 mm layer was more in case of zero till than conventional till plots at wheat harvest. In conclusion, rice straw can be efficiently managed as straw mulch in zero-till wheat using “Happy Seeder”, it will enhance N use efficiency and soil health compared with straw burning in rice-wheat system in the Indo-Gangetic plains of India.