Intercropping soybean (Glycine max L.) with sorghum (Sorghum bicolor L.) is common in the semiarid tropics of India. In most intercropping studies, little attention has been paid to belowground interaction and nutrient management other than N while assessing yield advantage. In a 5‐yr field experiment (2000–2004), we evaluated the impact of fertilizer and organic manures on below‐ and aboveground interaction, competitive ability, and economic viability of this intercropping at the Indian Institute of Soil Science, Bhopal for deep Vertisol (isohyperthermic Typic Haplustert) of central India. Above‐ and belowground growth components as well as biological activities were greatly improved in intercropped sorghum while the value of these except nitrate reductase (NR) activity, soil microbial biomass C (SMBC), and dehydrogenase activity (DHA) were reduced in intercropped soybean indicating interspecies competition between component crops. The increased NR activity, SMBC, and DHA in intercropped soybean revealed interspecies facilitation between the component crops. This showed that interspecies competition concurred with interspecies facilitation in this system. We observed that yield and land equivalent ratio (LER) of both the intercrops increased over sole crops though based on aggressivity and relative crowding coefficient (RCC), sorghum (+) is more competitive than soybean. Interaction of yield with different components indicated that three belowground components, i.e., NR activity in root (r = 0.62, r = 0.63, P < 0.05), root length density (r = 0.36, r = 0.33, P < 0.05), and SMBC (r = 0.71, r = 0.66, P < 0.05) of both intercrop soybean and intercrop sorghum, respectively, had the greater effect on yield advantage in the intercropping system. Soybean did not benefit from intercropping to the same degree as sorghum under N–P–K. Nutrient application influenced LER, RCC, and monetary advantage index and was found in the order of N–P–K plus farmyard manure (FYM) > N–P–K plus poultry manure (PM) > N–P–K plus phosphocompost (PC) > N–P–K > control. However, based on competition ratio, yield advantage was greater under N–P–K plus PM. The results suggest that sorghum is the major contributor to the mixture yield and that the integrated use of N–P–K plus FYM or N–P–K plus PM is an important nutrient management option for sustaining this intercropping system, particularly to benefit the legume component.