A sandy clay loam soil was used to study the effect of (a) urea application at rates equivalent to 250, 500, 1000 and 2000 ppm‐N, at moisture content level of 100 % WHC, and (b) soil moisture levels of 30, 60 and 100 % of the WHC in addition to water‐logging conditions, when urea was applied at the rate of 500 ppm‐N, on urea‐N transformations. In both cases, the incubation took place at 30°C and lasted for 6 weeks. The experiments were carried out in a closed system daily aerated. Complete hydrolysis of the added urea was attained after 1, 2 and 3 weeks for 250, 500 and 1000 ppm urea‐N, respectively. Six weeks incubation period was not enough for full hydrolysis of the 2000 ppm urea‐N. The rate of urea hydrolysis increased linearly for urea concentration up to 1000 ppm N. This concentration must have been sufficient to saturate the urease present in the soil used. The peak of NO 2−N was higher the higher the rate of urea applied. Delay of the nitrate formation was always accompanied by the accumulation of nitrites. At the end of the experiment, the nitrate‐N formed represented 93,90,77 and only 20 % of the initially applied nitrogen for 250, 500, 1000 and 2000 ppm‐urea‐N, respectively. The rate as well as the total ammonia loss increased with increasing the rate of urea application. No appreciable differences were observed in urea hydrolysis due to the variations in moisture levels within the range of WHC. Under water‐logging conditions, urea hydrolysis was slower and extended to the 6th week, also the rate of urea hydrolysis was no more than 50 % of the rate produced in moisture treatments within WHC. NO 2−N accumulation persisted for one week in the moisture levels within the range of WHC, while it continued in the water‐logged treatment till the end of the experiment. Nitrate formation was slightly favoured at 100 % WHC and decreased somewhat with lowering the soil moisture levels. However, it was completely inhibited under water‐logging conditions. Ammonia volatilization was not markedly affected by moisture levels within WHC, however, the water‐logged treatment showed the highest total loss.