Agriculture in rainfed dry areas is often challenged by inadequate water and nutrient supplies. Summerfallowing has been used to conserve rainwater and promote the release of nitrogen via the N mineralization of soil organic matter. However, summerfallowing leaves land without any crops planted for one entire growing season, creating lost production opportunity. Additionally, summerfallowing has serious environmental consequences. It is unknown whether alternative systems can be developed to retain the beneficial features of summerfallowing with little or no environmental impact. Here, we show that diversifying cropping systems with pulse crops can enhance soil water conservation, improve soil N availability, and increase system productivity. A 3-yr cropping sequence study, repeated for five cycles in Saskatchewan from 2005 to 2011, shows that both pulse-and summerfallow-based systems enhances soil N availability, but the pulse system employs biological fixation of atmospheric N 2 , whereas the summerfallow-system relies on 'mining' soil N with depleting soil organic matter. In a 3-yr cropping cycle, the pulse system increased total grain production by 35.5%, improved protein yield by 50.9%, and enhanced fertilizer-N use efficiency by 33.0% over the summerfallow system. Diversifying cropping systems with pulses can serve as an effective alternative to summerfallowing in rainfed dry areas.