To improve the soil physical and chemical properties and to increase the yield of chilli, a field experiment was conducted during kharif 2013-14 and 2014-15 on Byadgi chilli by substituting fertilizer nitrogen with different sources of organic manures along with foliar application of water soluble fertilizers. The experiment consists of four main treatments as organics, M1- Recommended Package of Practices (RPP)-{Recommended Dose of Fertilizers (RDF) + 25 t ha-1 FYM}, M2- 50 per cent N through FYM + 50 per cent inorganic N, M3- 50 per cent N through VC + 50 per cent inorganic N, M4- 50 per cent N through FYM and VC + 50 per cent inorganic N and four sub treatments as water soluble fertilizers, S1- KNO3 @ 1 per cent, S2- K2SO4 @ 1 per cent, S3- 19:19:19 @ 1 per cent, S4- KNO3+ K2SO4+ 19:19:19 each @ 1 per cent along with one control ( RPP + water spray) with three replications. 50 per cent substitution of N through vermicompost increased fruit yield (9.79 kg ha-1) and improved soil physical parameters like bulk density, percent porosity, water holding capacity and water stable aggregates and chemical parameters like soil reaction, electrical conductivity, organic carbon, N, P2O5, K2O and S content. On the basis of these experimental results a recommendation can be formulated to the farmers that they can substitute 50 per cent of N through vermicompost along with foliar spray of 19:19:19 to increase crop production and to improve soil properties.