Attempts to restore native biodiversity into agricultural landscapes in New Zealand appear to be compromised both by soil nitrogen enrichment from farming and N-leakage to the wider environment. We investigated whether interactions between native earthworms and a native rhizobium-inoculated leguminous shrub (Sophora microphylla) have a measurable effect on the mobility of nitrogen in an agricultural soil that has been nitrogen-enriched and colonised by exotic earthworms. Plants grew better in the presence of both native and exotic soil-burrowing earthworms. Rates of root nodulation were considerably enhanced in the presence of the native megascolecid anecic earthworm Maoridrilus transalpinus. This species consumed more organic matter in the presence of inoculated plants whilst marginally lowering soil pH and enhancing critical concentrations of nitrate, but also reducing nitrous oxide emissions. Earthworms raised dehydrogenase enzyme activity and microbial activity in soil, but this was not commensurate with rates of nodulation. Our results show that some combination of earthworm-mediated soil aeration, modification of moisture conditions in the rhizosphere and drilosphere, and comminution of organic matter, modify microbial communities and significantly impact the N cycle.