In grazed dairy pasture systems, a major source of nitrate (NO₃^-) leached is the nitrogen (N) returned in the urine from the grazing animal. The objective of this study was to use undisturbed soil monolith lysimeters to quantify the effectiveness of treating a grazed pasture soil with a nitrification inhibitor, dicyandiamide (DCD), in decreasing NO₃^- leaching losses from a deep sandy Templeton soil (Udic Haplustept) with a mixture of perennial ryegrass (Lolium perenne) and white clover (Trifolium repens) pasture. The treatment of the soil with DCD decreased NO₃^--N leaching from 85 kg N/ha.year to 20-22 kg N/ha.year (equivalent to 74-76% reduction) for the dairy cow urine N applied in the autumn at the rate of 1000 kg N/ha. This reduced annual average NO₃^--N concentration under the urine patch from 25 mg N/L to 7 mg N/L. The DCD treatment also reduced Ca²⁺ leaching by 38-56% and Mg leaching by 21-42%. In addition, the DCD treatment increased herbage dry matter yield in the urine patch areas by 15-33%, from 15.9 t/ha.year without DCD to 18.2 t/ha.year in the single DCD application in May and to 21.1 t/ha.year in the May plus August DCD treatment. Treating grazed pasture soil with DCD is thus not only beneficial to the environment by reducing NO₃^- leaching but also has economic benefits by increasing nutrient use efficiency and pasture production.