A field experiment was carried out from 1988 to 1993 at IPSA, Bangladesh, to evaluate the effects of long-term application of organic residues on the improvement of soil chemical and physical properties and on the increase in the crop yield. Five kinds of organic residues (no-application, rice straw, ipilipil leaves, compost, and cowdung) were applied every June to cover soil surface uniformly as a thin layer and incorporated into the soil to the depth of 10 cm. Rice (July to October) and wheat (mid-November or December to March) were cultivated in rotation under the combination of five organic-residue treatments and three levels of inorganic N fertilizer. The soil is terrace soil and was originally poor in chemical and physical properties. By application of organic residues, organic matter and total N contents of the surface layer were remarkably increased until nearly double. The soil increased in amount of available water by 50 %, became less compact and more porous, and increased in infiltration rate, although these improvements were limited to the ploughing depth of maximum 10 cm. Among the organic residues, compost made of rice-straw and cowdung was the most effective to improve both chemical and physical properties. Rice straw tended to improve physical properties rather than chemical properties, while ipilipil leaves and cowdung were effective to the improvement of chemical properties. Effect of application of organic residues on the increase in the crop yield was more distinct for rice than for wheat, because organic residues were applied just before transplantation of rice seedlings. Grain yield of rice increased with year and attained the maximum and stabilized state after 4th year from initiation of the experiment in which grain yield of more than 2.5 Mg/ha was obtained under no-application of inorganic N fertilizer. With a combination of 75-100 kg/ha of N fertilizer, yield over 4 Mg/ha was expected. Among the organic residues, compost was the most effective, closely followed by ipilipil leaves and cowdung. Grain yield of wheat increased linearly with amount of N fertilizer applied in each year. Maximum grain yield was 3.5-4.0 Mg/ha under 120 kg/ha of N. Application of organic residues significantly increased grain yield of wheat. But, accumulation effect of organic residues on the yield was not observed and grain yield was still below 1.0 Mg/ha under no-N application even after 5 years of cultivation. Among the organic residues, compost brought about the highest grain yield. Compost was concluded to be the most effective organic residue to improve soil chemical and physical properties under the crop rotation of rice and wheat in terrace soil. It was estimated for compost to increase the rice yield mostly through improvement of chemical properties and to contribute to increase in the wheat yield by improvement of physical properties.