Presently, increasing nitrogen fixation in soybean is critical because of widespread increase in soil degradation in Egypt. Therefore, a greenhouse research was conducted at the laboratory of Plant Nutritional Physiology, Hiroshima University, Japan for assessing the impact of compost in alleviating the adverse effects of water stress on soybean. The nitrogen-fixing activity was estimated by using gas chromatograph. The results showed that water deficit stress reduced biological nitrogen fixation and specific nodule activity than normal irrigation conditions. Application of compost increased the biological nitrogen fixation and specific nodule activity under water stress conditions. As the results indicate that compost application could help in improving nitrogen fixation in soybean.