Phosphorus losses from animal manures contribute to eutrophication in areas where animal feeding operations are geographically concentrated. Dietary modification with phytase is one strategy to reduce P inputs into animals, and thus P losses from manures. However, the full environmental impacts of dietary modification treatments are not fully understood. A study was conducted in which nursery swine were fed a commercial diet based on NRC available P (aP), or a phytase diet based on NRC aP –0.1%. Ammonia (NH3) volatilization and manure chemistry were monitored during the 6-week feeding trials. Manure was applied to plots and runoff from simulated rainfall was characterized. In a final study with manure from the feeding trials, manure was added to high and low soil test P (STP) soil, and changes in STP fractions were characterized during a 16-week incubation period. Ammonia volatilization was reduced from 109 mg NH3/m2/h from manure in pens of swine fed the normal diet to 81 mg NH3/m2/h from phytase diet manure, a 26% reduction. Manure soluble P was reduced by 17% with inclusion of phytase in the diet, however there was a 25% increase (not significant) in soluble P runoff from the phytase manure compared to the normal diet manure. Soluble P was roughly equal for normal and phytase manure immediately following addition of manure to high STP soil. However, there was 13% more soluble P in phytase manure 2 weeks following application, and 25% increase in soluble P 16 weeks after application. There were no significant differences in phytase and normal manure Mehlich 3 extractable P concentrations. Phytase may induce important production and environmental benefits through reduction in NH3 losses, however water quality benefits may not be immediately realized. Further research should be conducted to assess the environmental benefits of phytase at the field, farm and watershed scale.