Conservation tillage has become an attractive form of agricultural management practices for corn and soybean production on heavy textured soil in southern Ontario because of the potential for improving soil quality. A controlled drainage system combined with conservation tillage practices has also been reported to improve water quality. In Southwestern Ontario, field scale on farm demonstration sites were established in a paired watershed (no-tillage vs. conventional tillage) on clay loam soil to study the effect of tillage system on soil structure and water quality. The sites included controlled drainage and free drainage systems to monitor their effect on nitrate loss in the tile drainage water. Soil structure, organic matter content and water storage in the soil profile were improved with no-tillage (NT) compared to conventional tillage (CT). No-tillage also increased earthworm populations. No-tillage was found to have higher tile drainage volume and nitrate loss which were attributed to an increase in soil macropores from earthworm activity. The controlled drainage system (CD) reduced nitrate loss in tile drainage water by 14% on CT site and 25.5% on NT site compared to the corresponding free drainage system (DR) from May, 1995 to April 30, 1997. No-tillage farming practices are definitely enhanced by using a controlled drainage system for preventing excessive nitrate leaching through tile drainage. Average soybean yields for CT site were about 12 to 14% greater than the NT site in 1995 and 1996. However, drainage systems had very little effect on soybean yields in 1995 and 1996 due to extremely dry growing seasons.