A field experiment conducted for two years during rabi and kharif seasons of 2010-11 and 2011-12 at Deodhe, Ratnagiri (Maharashtra) revealed that application of increasing fertility levels up to 125% RDF significantly improved pod and haulm yields as well as protein and oil content of groundnut. Succeeding rice crop showed significant response to residual fertility levels up to 100% RDF in grain yield and up to 125% in straw yield. The groundnut crop inoculated with biofertilizers (Rhizobium+PSB) produced significantly higher pod, haulm and oil yields of groundnut, grain and straw yields of succeeding rice over no inoculation. Rice crop responded significantly to each higher level of fertilizers up to 125% RDF (direct) in terms of grain and straw yields. On the basis of balance sheet of nutrients added and removed, maximum deficits in N and K and positive balance in P were found under 125% RDF and biofertilizers (applied to groundnut crop). Successive increase in fertility levels up to 125% RDF in rice declined the negative balance of available nitrogen and improved the phosphorus balance in soil. Compared to initial status, more positive balances of N, P and K were recorded under the treatments 125% RDF (applied to groundnut), Rhizobium+PSB inoculation (applied to groundnut) and 125% RDF (applied to rice) in soil after harvest of groundnut-rice cropping system.