Residue burning is a quick, labor-saving practice to remove residue that is viewed as a nuisance by producers in most southern provinces of Iran. However, residue burning has several adverse environmental and ecological impacts. The burning of dead plant material adds a considerable amount of CO2 and particulate matter to the atmosphere and can reduce the return of much needed C and other nutrients to the soil. Whereas, crop residues incorporation can improve soil quality and reduce air pollution on a long term basis. However, where residues have been soil incorporated, farmers often have concerns for reduced soil fertility from nutrient immobilization and problems for cultivation associated with slow rates of residues decomposition. A 3-years (2005-2007) field study was carried out at the College of Agriculture, Shiraz University, Shiraz, Iran to evaluate the influence of crop residues management and nitrogen (N) rates on dryland wheat. The optimum crop growth and the highest grain yield was achieved from the highest crop residues and N rates, indicating that the most reliable system for dryland wheat production in the region is complete residues incorporation into the soil following disking, seeding with chisel seeder and application of 70 kg N ha-1.