Field experiments were conducted to compare plant residue decomposition and nitrogen (N) dynamics in an alley cropping system (AC) and an annual legume‐based cropping system (NA) in the Piedmont region of Georgia, USA. The hedgerows of the alley cropping system consisted ofAlbizia julibrissin(albizia) established in January 1990. Hedges were four meters apart with a spacing within rows of one‐half meter. A rotation beginning withMucuna deeringiana(velvet bean) followed by a winter annual crop ofTrifolium incarnatumL. (crimson clover), a summer crop ofSorghum bicolor(L.) Moench (grain sorghum) and a winter crop ofTriticum aestivumL. (wheat) was established in the alley cropping system and a control annual cropping system. All crops were grown using no‐tillage systems. Plant residue decomposition and N dynamics were measured using litterbag technologies on crimson clover, albizia, and grain sorghum. Soil and plant total N, decay rate constants (k) for dry matter, soil potentially mineralizable N, and nitrification rates were determined. Decay rate constants for N were best correlated with the lignin content of the plant residues. No residue quality parameter was significantly correlated with decay rate for dry matter. There was no significant difference between AC and NA systems in soil inorganic N and potentially mineralizable N; however, nitrification rates were greater in the AC. Grain sorghum N uptake and biomass production were not different for AC and NA. This was thought to be due to large inputs of organic N prior to the start of the experiment.