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Heathlands and grasslands occur in montane regions, naturally or due to anthropogenic land-use. These are typically nutrient-poor but exposure to elevated nitrogen deposition and intensive livestock grazing causes large-scale ecological change. We studied the long-term implications of grazing removal on soil and drainage water biogeochemistry and the implications for nitrogen cycling in fifty-year replicated grazing exclosures on a montane grassland exposed to high rates of ambient nitrogen deposition. Evidence of ‘ecosystem recovery’ represented by successional change from graminoid to shrub-dominance after cessation of grazing was not reflected in the soil biogeochemistry. Cessation of grazing had a negative impact, with increased soil extractable and soil solution nitrate concentrations; an apparent shift towards a more nitrogen-rich, bacterially dominated microbial community; and the acidification of soils and leachate. The increase in nitrate leaching appears to have been counterbalanced by a decrease in dissolved organic nitrogen leaching, approximately maintaining the overall nitrogen balance of the system, whilst apparently altering ecosystem functioning. High rates of organic matter cycling and inorganic nitrogen uptake in grazed grassland may have sustained ecosystem N limitation under elevated nitrogen deposition. Grazing removal caused long-term over-supply of nitrogen from mineralisation of enriched organic matter, exacerbated by continued high nitrogen deposition, exceeding the uptake demand of heath vegetation and resulting in nitrification and nitrate leaching. This disequilibrium between vegetation and soil following grazing removal has implications for restoration after periods of intensive grazing. Grazing may not simply leave a legacy of nutrient enrichment but its cessation may trigger nitrogen saturation and soil and freshwater eutrophication and acidification which counteract the immediate benefits of natural vegetation recovery. Long term, nitrogen saturation of abandoned grasslands is likely to reduce ecosystem resilience to invasion by nitrophilous species, pathogen attack and vulnerability to environmental pressures such as climate change. We conclude that partial and/or phased reduction in grazing levels may permit the more synchronised recovery of soils and vegetation, thereby avoiding imbalances between nitrogen supply and nitrogen demand and detrimental ecological effects.