One of the potential environmental effects of the recent rapid increase in the global agricultural area cultivated with transgenic crops is a change in soil microbially mediated processes and functions. Among the many essential functions of soil biota are soil organic matter decomposition, nutrient mineralization and immobilization, oxidation-reduction reactions, biological N fixation, and solubilization. However, relatively little research has examined the direct and indirect effects of transgenic crops and their management on microbially mediated nutrient transformations in soils. The objectives of this paper are to review the available literature related to the environmental effects of transgenic crops and their management on soil microbially mediated nutrient transformations, and to consider soil properties and climatic factors that may affect the impact of transgenic crops on these processes. Targeted genetic traits for improved plant nutrition include greater plant tolerance to low Fe availability in alkaline soils, enhanced acquisition of soil inorganic and organic P, and increased assimilation of soil N. Among the potential direct effects of transgenic crops and their management are changes in soil microbial activity due to differences in the amount and composition of root exudates, changes in microbial functions resulting from gene transfer from the transgenic crop, and alteration in microbial populations because of the effects of management practices for transgenic crops, such as pesticide applications, tillage, and application of inorganic and organic fertilizer sources. Possible indirect effects of transgenic crops, including changes in the fate of transgenic crop residues and alterations in land use and rates of soil erosion, deserve further study. Despite widespread public concern, no conclusive evidence has yet been presented that currently released transgenic crops, including both herbicide and pest resistant crops, are causing significant direct effects on stimulating or suppressing soil nutrient transformations in field environments. Further consideration of the effects of a wide range of soil properties, including the amount of clay and its mineralogy, pH, soil structure, and soil organic matter, and variations in climatic conditions, under which transgenic crops may be grown, is needed in evaluating the impact of transgenic crops on soil nutrient transformations. Future environmental evaluation of the impact of the diverse transgenic crops under development could lead to an improved understanding of soil biological functions and processes.