Controlled Traffic Farming (CTF) is an in-field traffic management strategy to minimise soil compaction. The aim of this study was to perform a Life Cycle Assessment (LCA) based on a modelling approach to estimate environmental impacts of producing wheat in Denmark using CTF compared to the conventional practice of Random Traffic Farming (RTF). Compared to the RTF system, CTF reduced environmental impacts on a grain-weight basis in all impact categories analysed: aquatic eutrophication (8–16%), human toxicity (3–15%), terrestrial eutrophication (29%), climate change (50%), acidification (33%), eco-toxicity (11–138%), and land use (7%). Reductions in environmental impacts in the CTF system analysed are caused mainly by higher grain yields, less soil compaction, which decreases P-compound runoff and in-field soil N2O and NH3 emissions, and the use of auto-guidance, which induces less overlap during application of fertilisers and pesticides. The results, moreover, show that these environmental improvements are potentially relevant at a global scale.