Conventional tillage and crop establishment methods for the rice–wheat (RW) system are input intensive (water, labour and energy). About 24.5 million tonnes of rice residues are burnt every year on farms in north-western India before sowing of wheat, causing air pollution and soil health degradation. Therefore, alternative tillage, crop establishment and residue management practices are needed for long-term sustainability of the RW system. A 4-year field study evaluated four tillage and crop establishment methods in rice (in main plots) and three tillage and rice residue management methods in wheat (in subplots) for their effects on yield, soil fertility, and profitability of the RW system. Average rice yields were similar under conventional puddled transplanted rice (PTR) and conventional till dry seeder rice (CTDSR). Both of these treatments produced significantly greater yields (10–16%) compared with zero till DSR (ZTDSR) and ZT machine transplanted rice in non-puddled soil, respectively, regardless of tillage and straw management methods in the previous wheat crop. Wheat yields in ZT wheat (ZTW) with 100% surface retention of rice residue (+R) were significantly greater than conventional till without residue retention after 2 years of experimentation, and accompanied by significant increases in macro-nutrient (potassium) availability in soil. The ZTW−R (no residue) treatment produced 15% lower wheat yield than ZTW+R. System yield was highest in CTDSR-ZTW+R, which was 5% higher than the conventional practice PTR-CTW−R, resulting in Rs 17 000 ha⁻¹ greater net returns.