Excess nitrogen and bacteria concentrations in coastal waters of North Carolina have led to eutrophic conditions, fish kills, and the closure of shellfish waters. Regulatory efforts by the state to reduce nitrogen and bacteria loading to surface waters have focused on agriculture, urban runoff, and centralized wastewater treatment plant discharges without regard to septic system derived nitrogen and bacteria. The effects of septic systems on groundwater quality (nitrogen and bacteria) were evaluated in eastern North Carolina. Sixteen sites (residential yards) with septic systems in soils ranging from sand (group I) to sandy clay loam (group III) were instrumented with groundwater monitoring wells adjacent to the systems. It was determined that the soil type and separation distance had strong influences on septic system treatment efficiency. Increasing the separation distance requirements from systems to the seasonal high water table to 60 cm (from 30-45 cm) could improve the treatment efficiency of systems (4 mg/L decrease in median NH4+-N concentrations and 65 cfu/100 mL decrease in geometric mean E. coli densities) and groundwater quality. Soil profile descriptions and groundwater level data from the sites were used to evaluate the accuracy of soil color (chroma 2 or 1 colors) for determining the depth to the seasonal high water table (SHWT) for septic system design purposes. For most sites, soil colors and the measured SHWT were within 18 cm of each other. Therefore water level data also suggest an increase (15+ cm) in separation distance to SHWT indicators would be beneficial. Using groundwater quality and flow data from the sites, nitrogen loads from septic systems to groundwater were estimated. For the Newport River watershed, the septic system nitrogen loading rate to groundwater for systems in group I and II soils (28.5 to 57.5 kg/ha/yr) were similar to the nitrogen loading rate attributed to agriculture (37.5 kg/ha/yr) in the same county, and higher than estimates of atmospheric nitrogen deposition for the area (8 to 12 kg/ha/yr). Therefore, the potential pollutant contributions from septic systems to ground and surface waters should be included in watershed-scale efforts to reduce nitrogen and bacteria loading.