1. Plant-parasitic nematodes are important pests of agriculture and transgenic plants with potential for nematode control are currently being developed. The expression of cysteine proteinase inhibitors (cystatins) in potato confers partial resistance to potato-cyst nematode (PCN). Here, we used field studies to test for effects of cystatin-expressing potato on non-target soil organisms. 2. Microbial community structure, soil microarthropods and litter decomposition were studied during two growing seasons. In the second year, nematode control options of cystatin-expressing plants and an oxime carbamate nematicide application were compared for their non-target effects. 3. In the first year, the transgenic lines had no effect on the abundance, evenness or metabolic activity of the soil microbial community as determined by ester-linked phospholipid fatty acid analysis (PLFA). However, one transgenic line (D6/7) influenced the structure of the soil microbial community, PLFA suggested it favoured fungal growth relative to bacterial growth during the latter parts of the growing season. A second transgenic line (D5/13) was more effective against PCN. It reduced the abundance of the fungal fatty acid 18 : 2ω6 in late season, suggesting a suppression of fungal growth. 4. In the second year PLFA analysis suggested microbial abundance was reduced by 15% and 23% in the nematicide and transgenic treatments, respectively, relative to the control. Nematicidal treatment reduced the bacterial fraction of the microbial community, whereas the transgenic plants suppressed both the bacterial and fungal community components. 5. The observed changes in soil microbial community structure did not result in changes in the rate of leaf litter decomposition. 6. The transgenic lines had no significant effect on the abundance of soil microarthropods or free-living nematodes. 7. The study is the first stage of a risk assessment of the impact of transgenic nematode resistance on non-target soil organisms. It has highlighted the importance of including currently used management options when studying the effect of transgenic plants on non-target organisms. Both nematicide use and the transgenic plants affected components of the soil microbial community. However, the changes brought about by the two treatments were not sufficient to affect soil functioning, as measured by rates of litter decomposition.