Water exchange is routinely used in shrimp culture. However, there are few, if any, systematic investigations upon which to base exchange rates. Furthermore, environmental impacts of pond effluent threaten to hinder further development of shrimp farming in the U.S. The present study was designed to determine effects of normal (25.0%/d), reduced (2.5%/d) and no (0%/d) water exchange on water quality and production in intensive shrimp ponds stocked with Penaeus setiferus at 44 postlarvae/m2. Additional no-exchange ponds were stocked with 22 and 66 postlarvae/m2 to explore density effects. Water exchange rates and stocking density influenced most water quality parameters measured, including dissolved oxygen, pH, ammonia, nitrite, nitrate, Kjeldahl nitrogen, soluble orthophosphate, biochemical oxygen demand, phytoplankton and salinity. Reduced-exchange and no-exchange treatments resulted in reduced potential for environmental impact. Mass balance of nitrogen for the system indicates that 13–46% of nitrogen input via feed is lost through nitrification and atmospheric diffusion. Growth and survival were excellent in ponds with normal exchange, reduced exchange, and a combination of low density with no water exchange. A combination of higher stocking density and no water exchange resulted in mass mortalities. Mortalities could not be attributed to a toxic effect of any one water quality parameter. Production was 6,400 kg/ha/crop with moderate stocking density (44/m2) and reduced (2.5%/d) water exchange and 3,200 kg/ha/crop with lower stocking density (22/m2) and no water exchange. Results indicate that typical water exchange rates used in intensive shrimp farms may be drastically reduced resulting in a cost savings to farms and reduced potential for environmental impact from effluent.