The application of nitrification inhibitors (NIs) together with nitrogen fertilizers in grasslands is an effective alternative to reduce nitrate leaching and nitrogenous gases emissions to the atmosphere. Nevertheless, the use of NIs increases the amount of ammonium available for the plant that, due to its reported toxic effect in plants, can have a direct effect on crop production. Grassland species have traditionally suffered from intensive grazing and urea deposition and, therefore, a tolerance to ammonium nutrition could be expected in these species. Plants of Trifolium repens L. var. huia and Lolium perenne L. var. Herbus were grown under two nitrogen nutrition regimes (nitrate or ammonium) and three different nitrogen concentrations (0.5, 2.5 and 5 mmol/L). The effect of nitrogen form was determined on biomass production parameters, gas-exchange and water relations parameters as well as polyamine (PA) and ion tissue contents. Both grassland species showed tolerance to ammonium nutrition due to their capacity to adjust several metabolic processes in a species-specific way. Gas exchange measurements and biomass production (expressed as dry weight (DW)) were unaffected by the nitrogen form or dose in both species except for a decrease in root total DW in ryegrass plants grown under ammonium nutrition. Hydraulic conductance (L(0)) increased in ryegrass with increasing ammonium doses but no change due to the nitrogen source was observed in water potential (Psi(w)) values. Both species, and specially ryegrass, accumulated free ammonium mainly in roots when grown under ammonium nutrition and its translocation to the shoot via xylem was also observed. A clear difference in cations and PAs pattern was observed in each species when comparing both nitrogen nutrition regimes.