Weed control by sheep grazing during fallow periods in the dryland wheat-fallow system may influence soil C and N levels. The effects of fallow management for weed control and soil water conservation [sheep grazing (grazing), herbicide application (chemical), and tillage (mechanical)] and cropping sequence [continuous spring wheat (CSW), spring wheat-fallow (SW-F), and winter wheatfallow (WW-F)] on wheat biomass (stems + leaves) yield and soil organic C (SOC) and total N (STN) at the 0-120 cm depth was evaluated from 2004 to 2008 in western Montana. Annualized wheat biomass yield was greater in CSW than in SW-F and WW-F from 2004 to 2006 but varied among fallow management practices from 2004 to 2008. In 2008, SOC at 10-30, 30-60, 90-120, and 0-120 cm was greater in the mechanical than in the chemical or grazing treatment in CSW. In SW-F, SOC at 10-30, 30-60, and 0-120 cm was greater in the chemical than in the mechanical or grazing treatment. Similarly, STN at 0-5 cm was greater in the chemical and mechanical than in the grazing treatment but at 30-60 cm was greater in the grazing than in the chemical treatment in CSW. Reduced amount of wheat residue returned to the soil due to consumption by sheep during grazing probably reduced SOC and STN at the surface and subsurface layers compared with tillage and herbicide application. For sustaining wheat yields and soil organic matter, reduced tillage with continuous cropping and less intensive sheep grazing may be needed to increase the amount of residue returned to the soil.