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Soil degradation in the Mediterranean and other arid and semi-arid regions of the world is caused mainly by cultivation and grazing. A consequence of de-vegetation due to overgrazing has been a decrease in organic matter (litter) input to soil and a decrease of aggregate size and stability making soils more susceptible to erosion and to organic matter losses. This study provided evidence linking the Dissolved Organic Nitrogen (DON) export from river basins to livestock grazing intensity and the resulting decrease in vegetation. Koiliaris River Basin in Crete was selected to study the effects of livestock grazing on water quality because it offers a unique morphologic situation due to its karstic hydrogeology draining the upland grazing areas through karstic springs. Mass balance calculations of N loads indicated that organic N is behaving as a conservative substance. It is postulated that the two potential mechanisms of Mineralization–Immobilization-Turnover and Direct Uptake did not operate in the degraded soils of the karst and arguments are presented justifying the hypothesis. De-vegetated soils of the area had lower C and N content, the same bacterial count, but lower microbial activity, lower fungi counts and species richness and lower mineralizable N compared to naturally vegetated soils. DON was the predominant N species in both extracted soluble N pools. De-vegetated soils had lower decomposition potential compared to vegetated soils. Mineralization and plant uptake appeared to be restricted and leaching of soluble low aromaticity organic matter was favored. A linear relationship between DON export and livestock N load was obtained for five Greek basins suggesting a mechanism that operates on regional scales. The de-vegetation of grazing lands in Koiliaris River highland calcaric leptosols was shown to be a primary factor causing the decline of soil biochemical quality and DON can be used as a reliable indicator for livestock grazing impacts to soil biochemical quality.