The interactive role of nitrogen and carbon in the physiology of ectomycorrhizae (ECM) is examined. Nitrogen availability in forest soils dictates that inorganic forms are absorbed by ECM. The basic aspects of nitrogen metabolism (i.e., absorption, assimilation, translocation) in trees appear similar to those of other higher plants. Ectomycorrhizal fungi are selective in nitrogen preference but can generally utilize both ammonium and nitrate. Absorption of nitrogen from soil by ECM is dependent on the extent of absorbing surfaces and absorption efficiency. Carbon utilization by ECM fungi is less specific in pure culture than in symbiotic association. Fungi, as well as noninfected roots, can fix bicarbonate for specific amino acid biosynthesis. Carbohydrate movement preferentially occurs from host to fungus in the ECM. Fungal sheath absorption of nitrogen and accumulation through assimilatory enzymatic processes create a storage pool for nitrogen in the fungus. Directional transport of specific amino acids from fungus to host is metabolically mediated. Synergism occurs in carbon utilization and amino acid transport owing to the symbiosis. Partitioning of nitrogen within the tree is regulated by root-system and shoot-system sinks. A conceptual model is presented which encompasses the various aspects of the nitrogen and carbon physiological interactions in ECM.