To evaluate the sustainability of agricultural systems, the dynamics of nitrogen (N), phosphorus (P) and potassium (K) were studied at field and farm scales in Teghane micro-catchment, Northern Highlands of Ethiopia. Three farm wealth groups (rich, medium and poor) were distinguished based on farm size, capital assets and grain stocks. The NUTMON questionnaire and software have been used for data collection and calculation of partial macronutrient balances. The study indicates that total input to farm fields of all three macronutrients does not balance nutrient removal in crop yield and animal feeds. Consequently, N, P and K stocks in the soil are rapidly declining, with annual depletion rates higher for the rich group (2.4% of total N, 1.3% of total P and 1.3% of total K) than for the poor group (1.0% of total N, 0.2% of total P and 0.4% of total K), and the medium group taking an-intermediate position. For all three groups, current farm management is not sustainable. The study clearly identifies the need for the development of integrated nutrient management systems to reduce the high rates of nutrient depletion and to transfer to sustainable farm management systems. Three possible measures can be suggested: First, improvements in nutrient use efficiency from manure, which could be attained through judicious management, i.e. manure must be carefully stored to minimize physical loss of the manure/compost and nutrients, and that manure must be applied to the appropriate crop with the appropriate method at the proper time. Secondly, introduction of energy-saving stoves to reduce use of cattle dung for fuel and consequently increasing manure availability for field application. Thirdly, application of more external chemical fertilizer, together with improved rainwater harvesting for supplementary moisture supply.