<p dir="ltr"><b>Purpose</b>: Livestock production based on grazing is the most important productive activity in southern Chile. Most grasslands are located on volcanic soils with unexplained low nitrogen (N) leaching losses.</p><p dir="ltr"><b>Methods</b>: A cutting field experiment was carried out between February 2008 and March 2010 on an Andisol of the Osorno soil series, testing liming (0 or 2 t CaCO3 ha<sup>− 1</sup> yr<sup>− 1</sup>) and N rate applied as inorganic fertiliser applied in two equal dressings (0, 200, 400 kg N ha<sup>− 1</sup> yr<sup>− 1</sup>). Measurements of pasture yield, N uptake and N leaching losses were complemented with mineralization studies under field and laboratory conditions, and soil N abiotic retention.</p><p dir="ltr"><b>Results</b>: Total N leaching losses were greater in the 400 kg N treatments (90 kg N ha<sup>− 1</sup>, on average), with no differences between the liming treatments (10 kg N ha<sup>− 1</sup>, on average; <i>P</i> > 0.05). Nitrogen addition resulted in 50% and 92% more dry matter yield in treatments receiving 200 and 400 kg N than the control (N-0) treatment. Potential N mineralization varied between 206 and 282 mg N kg<sup>− 1</sup> dry soil. The mineralization of more recalcitrant components of soil organic matter increased with both N and lime addition. Soil had a greater capacity to retain added N as ammonium (74% on average).</p><p dir="ltr"><b>Conclusions</b>: The natural acidic soil conditions did not prevent nitrification, neither N leaching losses, probably associated to occurrence of N abiotic immobilization processes. Lime addition could influence N mineralization in the long term, while N addition would influence it in both short and long term.</p><p dir="ltr"><br></p>