Legume groundcovers have been promoted for controlling soil erosion in hillside banana plantations in northern New South Wales. An experiment was conducted at Alstonville to determine the effect of an Arachis pintoi (Pinto peanut) groundcover on banana productivity. The Arachis groundcover was slow to establish in the first year, but thereafter grew vigorously. While standing dry matter of groundcover was reduced at closer banana plant spacings, it was always more than adequate to control erosion. After 5.5 years many soil chemical parameters had been significantly affected by the presence of groundcover. Organic carbon concentrations to 30 cm depth were 5.6% greater on the groundcover plots (3.94 v. 3.71%), and total nitrogen was 8.5% greater (0.42 v. 0.39%). Other increases were exchangeable potassium 52%, calcium 26%, magnesium 43%, sodium 23%, electrical conductivity 24%, and pH 0.13 units. Banana leaf nutrient concentrations were not affected. Banana plants with groundcover produced 9% fewer bunches than their bare soil counterparts, with 4% fewer fingers per bunch. By the end of the experiment, fingers on the groundcover treatment were 9% lighter; consequently, the weight of marketable fruit (i.e. >120 g/finger) per bunch was reduced by 31% in the final year. The presence of groundcover reduced total fruit production over the whole trial by 16% and marketable fruit by 19%. In the last year of the experiment, total fruit production was reduced by 25%, and marketable fruit production by 40%. Over the whole trial, banana plants with groundcover produced 22% fewer suckers than the bare soil controls, with most of the effect occurring in the first 2 years. Soil temperatures at 20 cm under groundcover were as much as 0.7¦C cooler than the controls in October-January, but similar for the rest of the year. This effect possibly contributed to decreased yields. Although the experiment was irrigated, the irrigation was possibly inadequate for the groundcover treatment, and competition for water between the Arachis and banana plants may also have been responsible for part of the yield depression. Rats fed on the buried Arachis seed each winter.