<p>Sustainable management of crop residue remains a major challenge in cereal based systems, where traditional burning accelerates soil degradation, depletes organic matter, and reduces fertilizer use efficiency. A five year study was conducted to assess the role of <i>Sesbania</i> green manure and residue incorporation in improving nitrogen (N) content, crop productivity, and soil fertility under different N fertilizer rates. Eight treatments were evaluated, including residue burning, removal, disking, and their combinations with <i>Sesbania</i> at 150 and 100 kg N ha^− 1. Across years, mineral N dynamics showed rapid ammonium accumulation after fertilization, followed by nitrate dominance by Day 10 to 14. <i>Sesbania</i>-based treatments, particularly at 150 kg N ha^− 1, released mineral N more gradually but ultimately maintained the highest NH₄⁺-N and NO₃⁻-N levels in later periods. Even reduced N treatments (Removal + <i>Sesbania</i> 100 kg N ha^− 1; Disking + <i>Sesbania</i> 100 kg N ha^− 1) outperformed residue burning. Ammonia losses declined markedly in <i>Sesbania</i> treatments from Years 3–5 compared with burning. Agronomic results indicated that burning produced higher early-year responses, but from Year 3 onward, Sesbania treatments consistently increased biomass, grain yield, and 1000-grain weight. Disking + <i>Sesbania</i> + 150 kg N ha^− 1 achieved the highest performance, improved plant N concentrations, and enhanced soil organic matter, unlike residue-loss practices that depleted fertility despite high N inputs. Overall, <i>Sesbania</i>-based residue incorporation offers a superior, sustainable alternative to burning by improving N retention, crop productivity, and soil health while reducing environmental risks.</p>