Rainfed grain production in semi-arid, subtropical south-west Queensland in north-east Australia is marginal, because of low and variable rainfall and low soil fertility. Current cropping systems are based around winter cereals, with a summer fallow period essential for storing soil water to reduce risk. Increasing the soil water storage and the efficiency of water and nitrogen use is essential for sustainable crop production in this region. The effects on crop production and economic returns of various crop rotations involving winter crops - wheat ( Triticum aestivum), chickpea ( Cicer arietinum), faba bean ( Vicia faba) and canola ( Brassica napus); summer crops - grain sorghum ( Sorghum bicolor) and mung bean ( Phaseolus mungo); and fertilizer N application to wheat, canola and grain sorghum were studied from 1996 to 2005 on a grey Vertisol. Annual rainfall was above the long-term average in 6 of these 10 years and below average in 4 years. Crops were either not sown or failed due to drought in 3 years during this period. Under the seasonal conditions and grain prices that occurred during this experiment, mean annual gross margin was $100/ha greater for a 2-year chickpea-wheat rotation, $20/ha greater for a faba bean-canola-wheat rotation and $45/ha greater for an alternate cereal-grain legume rotation involving grain sorghum, mung bean, wheat and chickpea than for continuous wheat ($40/ha), where no nitrogen fertilizer was applied to wheat, canola or grain sorghum. Where nitrogen fertilizer was applied to target prime hard grain protein in wheat and maximize yield in canola and grain sorghum, chickpea-wheat ($170/ha) was the only rotation to result in greater gross margin than continuous wheat ($110/ha). Chickpea generally yielded well and resulted in a mean yield increase of 22% in the following wheat crop compared with continuous wheat, where no nitrogen fertilizer was applied in wheat and of 11% where N fertilizer was applied in wheat to target prime hard grain protein. On average, the grain legumes, chickpea and faba bean, provided soil nitrogen benefits of 20 and 40 kg N/ha, respectively, thereby reducing nitrogen fertilizer requirements for following cereal crops and canola. Therefore, the profitability and sustainability of crop production in this semi-arid, subtropical environment can be improved, compared with continuous winter cereal cropping, by appropriate crop rotations and nutrient management.