A field study for two consecutive years (1984-86) on palmarosa showed that the production of biomass and essential oil, the NPK uptake and the net profit were maximum with 30 x 30 cm spacings and they were statistically at par with 45 x 30 cm spacing. The application of 160 kg N/ha per year produced the highest amount of biomass and essential oil, and increased the net profit and NPK uptake by the crop. The nitrogen response of the crop was quadratic. The nitrogen use efficiency decreased with increasing levels of nitrogen. The apparent recovery of nitrogen by the crop was low (< 35%).