A mathematical model is used to investigate the role of sedimentation and remineralization in the sediment on nitrogen (N) dynamics in intensive shrimp culture ponds. The model describes the key processes involved in N cycling that underpin the dynamics of total ammoniacal N (TAN), nitrate/nitrite (NOX) and chlorophyll a (CHL) concentrations and the sediment N pool. These parameters may, in high concentrations, impact negatively on the shrimp or the adjacent aquatic environment when water is discharged from ponds. The model was calibrated for an Australian commercial shrimp (Penaeus monodon) pond. Most N enters the pond system as TAN from shrimp excretion of dietary N and decomposition of wasted feed, and is subsequently taken up by phytoplankton, which, on senescence, is sedimented and remineralized. Sediment remineralization is the dominant source of TAN in the water column for all but the beginning of the production cycle. The remineralization rate of sedimented N was estimated at 6% day-1. Nonetheless, sediment acts as a net sink of N throughout the production cycle. The effect of management strategies, including increased stocking densities, water exchange and sludge (=sedimented material) removal, on water quality was examined. Model outputs show that using current shrimp farming techniques, with water exchange rates of 7% day-1, an increase in stocking densities above 60 animals m-2 would result in unacceptably high TAN concentrations. Both sludge removal and water exchange provide effective ways of reducing TAN and NOX concentrations and may allow substantially higher stocking densities. However, sludge removal may be the more acceptable option, given the need to meet strict regulatory requirements for discharge loads in some countries and the desire to reduce water intake to improve biosecurity.