The application of anhydrous ammonia to soil by conventional applicators employing knife‐type injectors results in large concentrations of ammonia in a localized area. The effect of these concentrations on the soil population has been evaluated in several ways. The numbers of fungi and nematodes were reduced by all levels of ammoniacal nitrogen from 136 to 741 ppm. Compared to untreated soil, only 0.6% of the nematodes and 4.9% of the fungi survived when 608 ppm. of nitrogen were present in the soil. This level of ammoniacal nitrogen occurs regularly in the retention zone when anhydrous ammonia is applied in the field. The largest reduction in both nematodes and fungi occurred above 365 ppm. Field studies showed a drastic reduction in all nematodes in the retention zone. Plant parasitic nematodes were greatly decreased and in many cases certain species could not be detected during counting. Reestablishment of the nematodes was greatest among the saprophytic species and was of the same character as that following fumigation with conventional nematocides. The economic value of the reduction of plant parasitic nematodes by anhydrous ammonia, applied primarily for its nitrogen content, will require further work on a field basis. Gross elimination of nematodes is not necessary for successful crop production. Thus, it can be seen that in addition to the primary use of anhydrous ammonia as a fertilizer, the destruction of plant parasitic nematodes in the retention zone also may be of value. Nitrification studies showed this process to be inhibited by concentrations of ammoniacal nitrogen above about 300 ppm. The field situation is probably one where nitrification is inhibited within the retention zone but not at the periphery and, therefore, the nitrifiers gradually reduce the concentration of ammonia centripetally until all of it is utilized.