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The need for increased food production to support the growing global population requires more efficient nutrient management and prevention of nitrogen (N) losses from both applied fertiliser and organic matter (OM) decomposition. This is particularly important in semi-arid rainfed cropping soils, where soil water and temperature are the dominant drivers of N cycling rather than agricultural management. Here we used 14C and 15N techniques to examine how peptide/amino acid turnover, gross and net N transformation rates and nitrous oxide (N2O) emissions responded to long-term plant residue additions and/or short-term root exudate additions. Soil was collected from a semi-arid rainfed field trial with one winter crop per year followed by a summer fallow period, where additional inputs of straw/chaff over 10 years had increased total soil organic C (SOC) by 76% compared to no extra additions (control). These field soils were incubated in the laboratory with or without a synthetic root exudate mixture at a range of temperatures reflecting regional field conditions (5–50 °C). Long-term plant residue additions (to build up total soil OM) did not decrease the risk of N loss as defined by the nitrification:immobilisation (N:I) ratio at most temperatures, so was not an effective management tool to control N losses. In comparison, short-term root exudate additions decreased the risk of N loss at all temperatures in both the control and plant residue treatment field soils. Increased net N mineralisation and decreased microbial C use efficiency at temperatures greater than 30 °C resulted in significant ammonium (NH4+) accumulation. Microbial decomposers appeared to use amino acid-C for growth but peptide-C for energy production. Findings indicate that the greatest risk of N loss in these semi-arid soils will occur during rains at the start of the growing season, due to inorganic N accumulation over summer fallow when there are high soil temperatures, occasional significant rainfall events and no growing plants to release root exudates. While most attempts to manipulate the soil N cycle have occurred during the winter cropping period, our findings highlight the need to manage N supply during summer fallow if we are to minimise losses to the environment from semi-arid soils.