Leucaena leucocephala is cultivated at close spacings that do not permit intercropping. This has been a discouraging factor for small landholders who need regular income to establish leucaena plantations and benefit from the rapidly expanding market for wood. Therefore, on-farm experiments were conducted near Bhadrachalam, Khammam district, Andhra Pradesh, India, from August 2001 to January 2006, to study the effect of reducing tree density and modifying tree geometry on the growth of leucaena and productivity of intercrops. The inter-row spacing of 1.3 m in farmers' practice was increased up to 13 m to examine whether wide-row planting and grouping of certain rows would facilitate extended intercropping without sacrificing wood yield. Tree density treatments tried were 1.3 × 1.3 m, 3 × 0.75 m, 3 × 1 m, 5 × 0.8 m and 3 × 2 m which gives densities of 5919, 4444, 3333, 2500 and 1666 trees ha−1, respectively. Tree geometry treatments tested were 7 × 1 m paired row spacing (7 × 1 PR), 10 × 1 m triple row spacing (10 × 1 TR), and 13 × 1 m four rows (13 × 1 FR) with a constant tree population of 2500 trees ha−1. Cowpea (Vigna unguiculata) was the intercrop. While changes in tree density affected diameter at breast height (DBH) significantly, modification of tree geometry did not affect tree height and DBH. Marketable wood and dry biomass productivity was highest with 3 × 0.75 m spacing, and reducing tree density and alteration of tree geometry reduced the biomass considerably. In 2001, 2002 and 2003 seasons, respectively, tree spacing at 3 m produced mean yields of 97, 23 and 11% of the sole crop cowpea yield whereas modified tree geometry treatments produced mean yields of 97, 61 and 20% of sole crop yield. The widest spacing (13 × 1 FR) recorded 95, 73 and 30% of the sole crop yields during 2001, 2002 and 2003, respectively. Net returns from intercropping of leucaena in 3 × 0.75 m spacing was 36% higher than that of the farmers' practice. Although wider tree geometry treatments recorded lower net returns, they provided higher intercrop yields and returns in the first two years of plantation establishment. Therefore, it can be concluded that in regions where annual rainfall is around 1000 mm, leucaena can be planted at a spacing of 3 × 0.75 m for improving intercrop performance, higher tree productivity and returns.