Literature on positive plant microbial interactions in perennial ryegrass dairy pasture systems is reviewed and interactions that have been reported to have a substantial impact on pasture production and/or levels of chemical inputs into or losses from the system are assessed. Utilisation of N2 fixing (rhizobia) white clover as the N input into a perennial ryegrass pasture is likely to give pasture and milk production similar to that with addition of 200 kg inorganic N ha−1 annum−1 and avoid greenhouse gas emissions resulting from N fertiliser production. Use of the nitrification inhibitor dicyandiamide that de-activates the ammonia monooxygenase enzyme in ammonia-oxidising bacteria can substantially reduce NO3− leaching and N2O emissions from perennial ryegrass pastures while increasing productivity. Infection of perennial ryegrass plants with the fungal endophyte Neotyphodium lolii is very significant for the production and persistence of dairy pastures in Australasia due to the endophyte producing a range of alkaloids that confer benefit to the host plant through insect resistance/repellance. In addition, there is considerable potential to manipulate rumen microorganisms such that methane production per unit organic matter intake and the proportion of N uptake that is excreted in urine are decreased while production is maintained or increased. Also, P-solubilising bacteria and mycorrhizas are worthy of study in relation to the development of inoculants for use as a mechanism to increase P availability in pastures from reserves in the soil and/or applied rock phosphate.