Carbon loss (CO2 emission) through residue burning, which causes global warming, and intensive tillage, which reduces soil organic carbon (SOC) pool, is a major concern in rice-wheat systems (RWS). Assessments of the temporal variations in SOC and soil physical properties under different tillage and crop-residue treatments were performed through a three-year field experiment to understand the effect of these management practices on the environmental sustainability of the RWS. The wheat rotated with transplanted rice (TR) was found to be more effective in sustaining SOC than direct-seeded rice (DR). Intensive tillage practices of TR and DR increased bulk density and decreased saturated hydraulic conductivity, whereas crop residue incorporation helped decrease the negative impact of intensive tillage by increasing infiltration rate and decreasing soil strength. Incorporation of both rice and wheat residue to lateritic sandy loam helped improve soil quality and sustain yield of RWS. © Taylor & Francis Group, LLC.