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High nitrogen fixing and phytohormone producing diazotrophs such as Azotobacter were isolated, identified and used as bioinoculants on wheat and cotton with varying doses of nitrogen under field conditions. The impact of bio-inoculants was determined on the basis of their effect on yield, dry weight and survival rate of bacteria at different days of plant growth under field conditions in two consecutive seasons (2000–01 and 2001–02). Pronounced effects were seen by the use of bio-inoculants in wheat crop. The effects were more visible in the second year as the level of bio-inoculants was maintained in the soil. A net saving of 25–30 kg nitrogen was observed using chosen bio-inoculants for wheat crop.