Incorporating legumes into the cropping system has been shown to significantly improve the nitrogen nutrition of cereal crops in Central Queensland. However, little is known about the effect of these legumes on the chemical and physical properties of soil. We examined changes in soil chemical (total nitrogen, organic carbon and pH) and physical (bulk density, cone penetrometer resistance and saturated hydraulic conductivity) properties following either continuous cropping (sorghum or mungbean) or pasture legumes (siratro, lucerne, lablab and desmanthus) over 4 years. Soil carbon was also fractionated using a KMnO4 oxidation procedure which classifies the soil carbon into either labile or non-labile pools. All pasture legumes except desmanthus increased soil total nitrogen in the topsoil (0–10 cm) after only 2 years compared with sorghum. Total nitrogen in the soil did not significantly change under mungbean. Soil organic carbon progressively increased under siratro, desmanthus and sorghum but remained unchanged under the other legumes. Before the experiment, the percentage of total soil carbon classified as labile (oxidised by 333 mmol KMnO4/L) ranged from 14 to 17%. The amount of labile carbon increased by 17% after 3 years of siratro, remained unchanged under desmanthus and sorghum, and decreased under the annual legumes and lucerne. Non-labile carbon remained either unchanged or increased under all legumes, whereas it tended to decrease after 3 consecutive sorghum crops. Soil pH was generally highest under sorghum and lowest under lablab. Soil after sorghum had higher bulk density and penetrometer resistance compared with the effect of legumes but these differences were comparatively small. Saturated hydraulic conductivity of the soil was much higher on the soil surface than at 10 cm. On the surface, soil hydraulic conductivity (saturated) values were generally lower following siratro and higher after sorghum than the other species. At 10 cm depth, soil hydraulic conductivity (saturated) was generally lower in sorghum and, to a lesser extent, in mungbean plots reflecting the significantly lower density of macropores under these crops. It was concluded that although all legumes generally enhanced the chemical and physical properties of the cracking clay, perennial legumes such as siratro would have a greater beneficial effect in the longer term than annual legumes.