Application of dairy farm effluent to pasture is increasingly being used in New Zealand as a means of disposal and providing a valuable source of N for pasture. However, inappropriate application rates and timing can lead to poor utilization by plants and thus to nitrate leaching and groundwater contamination. This trial tested the effectiveness of a nitrification inhibitor, dicyandiamide (DCD), to reduce nitrate leaching from undisturbed monoliths (lysimeters, 50 cm diameter and 60 cm depth) of freely draining soil irrigated with repeated, high N-loadings of dairy farm effluent. A total effluent N-loading of 1100 kg ha −1 was applied to designated lysimeters during the southern hemisphere's cooler months (March to October) at two-weekly intervals. Three lysimeters received dairy farm effluent, a further three received effluent amended on one occasion with DCD at the rate 12 kg ha −1, and three received an equivalent volume of water. Irrigation of the effluent dramatically increased the amount of N leached from lysimeters, in comparison with the water treatment. Of the total effluent-N applied, 620 kg N ha −1 (56%) was leached over a period of 19 weeks. DCD reduced the cumulative amount of total N leached from effluent-irrigated lysimeters by 18%. Plant uptake of N greatly reduced N-leaching during early spring (August–September). Lysimeters receiving effluent supported a significantly greater dry matter yield of perennial ryegrass than those irrigated with water. For lysimeters receiving DCD-amended effluent, dry matter yields were significantly greater overall than for effluent-irrigated lysimeters. The increase in dry matter yield fully accounted for the N conserved from leaching as a result of using DCD. Effluent applications should be avoided altogether in mid-winter (mid June to late July) when the greatest loss of N from leaching occurs. The reduction in N leached achieved by applying DCD was not sufficient to avert high N losses and environmental damage in the case of repeated, high effluent-N loadings during winter.