We compare the effect of arbuscular mycorrhizal (AM) colonization and PO4−3 fertilization on nitrate assimilation, plant growth and proline content in lettuce plants growing under well-watered (−0.04 MPa) or drought (−0.17 MPa) conditions. We also tested how AM-colonization and PO4−3 fertilization influenced N uptake (15N) and the percentage of N derived from the fertilizer (% NdfF) by plants under a concentration gradient of N in soil. Growth of mycorrhizal plants was comparable with that of P-fertilized plants only under well-watered conditions. Shoot nitrogen content, proline and nitrate reductase activity were greater in AM than in P-fertilized plants under drought. The addition of 100 μg g−1 P to the soil did not replace the AM effect under drought. Under well-watered conditions, AM plants showed similar (at 3 mmol N), greater (at 6 mmol N) or lesser (at 9 mmol N) %NdfF than P-fertilized plants. Comparing a control (without AM inoculation) to AM plants, differences in % NdfF ranged from 138% (3 mmol N) to 22.6% (6 mmol N) whereas no differences were found at 9 mmol N. In comparison with P fertilization, mycorrhizal effects on %NdfF were only evident at the lowest N levels, which indicated a regulatory mechanism for N uptake in AM plants affected by N availability in the soil. At the highest N level, P-fertilized plants showed the greatest %NdfF. In conclusion, AM symbiosis is important for N acquisition and N fertilizer utilization but this beneficial mycorrhizal effect on N nutrition is reduced under large quantities of N fertilizer.