The distribution of microbial biomass C and N and the decline in gross N mineralisation and NH4+ consumption with soil depth was investigated in 2 soils with different soil texture and land use. Soils were from an annual pasture on a loamy sand and from a sandy clay loam previously cropped with wheat. Intact soil cores were collected from the surface 0-10 cm in steel tubes and were sampled in 2.5 cm layers. Disturbed soil down to 50 cm was collected in 10 cm sections using a sand auger. Microbial biomass was estimated by chloroform fumigation and 0.5 M K2SO4 extraction. Microbial biomass C was determined from the flush in ninhydrin-positive compounds, and microbial biomass N from the flush in total soluble N after K2S2O8 oxidation. Gross N mineralisation and NH4+ consumption were estimated by N-15 isotopic dilution using (NH3)-N-15 gas injection to label the soil (NH4+)-N-14 pool with N-15. The pattern of distribution of the microbial biomass and the rate of N transformations were similar for both soils. There was a rapid decline in microbial biomass C and N and gross N mineralisation with soil depth. Approximately 55% of the microbial biomass, 70-88% of gross N mineralisation, and 46-57% of NH4+ consumption was in the surface 0-10 cm in both soils. There was also a stratification of microbial biomass and gross N mineralisation within the 0-10 cm layer of intact soil cores. It was estimated that one-quarter of the total microbial biomass and at least one-half of the total gross N mineralisation within the soil profiles (0-50 cm) was located in the surface 2.5 cm layer. These results demonstrate the importance of the surface soil layer as a major source of microbial activity and inorganic N production. There was a strong correlation between the distribution of microbial biomass and the gross rate of mineralisation of soil organic N within the soil profile.