Eroded lands have very poor soil fertility and crop productivity due to the loss of top fertile soil during soil erosion. In order to meet the food requirements of increasing population such lands need to be restored. To achieve this objective, experiments were conducted at three sites i.e., Guljaba (slightly eroded), Gado (moderately eroded) and Kotlai (severely eroded), District Swat, North West Frontier Province (NWFP) of Pakistan from 2006 to 2008. The experiments were carried out to study the efficacy of combined application of organic and inorganic sources of plant nutrients and mungbean residues on soil fertility and crop productivity under wheat- mungbean-wheat cropping system. Mungbean was grown and a basal dose of 25-60-0 kg N-P2O5-K2O ha-1 was applied. After mungbean harvest, three residues management practices, i.e., R+ (mungbean residues incorporated into soil), R- (mungbean residues removed) and F (fallow) were performed. After mungbean, wheat was grown and fertilizer treatments for wheat crop consisted of T1 (control), T2 (120 kg N ha-1), T3 (120-90-0 kg N-P2O5-K2O ha-1), T4 (120-90-60 kg N-P2O5-K2O ha-1), T5 (90-90-60 kg N-P2O5-K2O ha-1 + 10 t FYM ha-1) and T6 (60-90-60 kg N-P2O5- K2O ha-1 + 20 t FYM ha-1). Experiments were laid out in RCBD split plot arrangement with residues management practices in the main plots and fertilizer treatments in the subplots. Three replications were used in the experiments. The results showed that soil properties were improved with T6 (application of 20 t FYM ha-1 and reducing commercial inorganic N fertilizer to 60 kg N ha-1) and incorporation of mungbean residues (R+) both at surface soil (0-20 cm soil depth) and sub-surface (20-45 cm soil depth). Soil pH and bulk density were decreased, while AWHC, soil organic matter, available K and P, mineral N, total N and microbial properties (microbial activity, microbial biomass C and N and mineralizable C and N) were improved with T6 and R+ at the three sites. Analysis of the data combined over both seasons and sites showed that all soil characteristics differed significantly among the sites Guljaba, Gado and Kotlai, as well as among seasons, both at surface (0-20 cm soil depth) and sub-surface soils (20-45 cm soil depth). The deleterious effect of erosion on soil properties was more prominent in severely eroded soil as compared to moderately and slightly eroded soils. Soil properties were improved over time from their initial values during Kharif 2006 at all the three sites due to residual or cumulative effect through addition of inorganic fertilizers, farmyard manure and mungbean residues management, which implies the restoration of soil fertility over time. T6 increased the biological yield of wheat significantly over the other treatments with an increase of 34, 44 and 47% compared with the control at Guljaba, Gado and Kotlai respectively. Similarly, R+ increased biological yield of wheat by 10, 12.9 and 13% compared with the Fallow at Guljaba, Gado and Kotlai respectively. Similar trends were observed for grain yield, straw yield, 1000-grain weight and harvest index of wheat. T6 increased N and P uptake by wheat significantly over the other treatments and increased N concentration in wheat plant with an increase of 19, 22 and 22.5% compared with the control at Guljaba, Gado and Kotlai respectively. Similarly R+ increased N concentration in wheat plant with an increase of 11.7, 12.9 and 12.7% compared with the control at Guljaba, Gado and Kotlai respectively. Similar trends were observed for Plant P, grain N and grain P concentrations of wheat, except that effect of residues management practices on P concentration in both plant and grain was non-significant (p>0.05). Economic analysis of fertilizer treatments and residue management practices revealed that application of 20 t FYM ha-1 and reducing commercial inorganic N fertilizer to 60 kg N ha-1 (T6) and R- (mungbean residues removed) gave the highest relative increase in income (RII). It can be concluded from this study that application of balanced rate of fertilizers in combination with farmyard manure (FYM) would improve soil physical, chemical and biological properties and restore crop productivity under wheat-mungbean-wheat cropping system on sustainable basis. Mungbean is a very useful crop, as its pods can be picked and the crop biomass can be incorporated to improve the fertility of soil. Keeping in view the importance of legumes in cereal legume rotation, wheat-mungbean-wheat cropping system and application of 20 t FYM ha-1 and reducing commercial inorganic N fertilizer to 60 kg N ha-1 for wheat crop is recommended for restoring crop productivity on eroded lands.