Nitrogen (N) leached into groundwater from urine patches of cattle grazing in situ is an environmental problem in pasture-based dairy industries. One potential mitigation is to breed cattle for lower urinary nitrogen (UN) excretion. Urinary nitrogen is difficult to measure, while milk urea nitrogen concentration (MUN) is relatively easy to measure. For animals fed diets of differing N content in confinement, MUN is moderately heritable and is positively related to UN. However, there is little information on the heritability of MUN, and its relationship with other traits such as milk yield and composition, for animals grazing fresh pasture. Milk urea nitrogen concentration data together with milk yield, fat, protein and lactose composition and somatic cell count was collected from 133 624 Holstein-Friesian (HF), Jersey (J) and HF×J (XBd) cows fed predominantly pasture over three full lactations and one part lactation. Mean MUN was 14.0; and 14.4, 13.2 and 13.9 mg/dl for HF, J and XBd cows, respectively. Estimates of heritability of MUN were 0.22 using a repeatability model that fitted year-of-lactation by month-of-lactation by cow-age with days-in-milk within month-of-lactation and cow-age, and 0.28 using a test-day model analysis with Gibbs sampling methods. Sire breeding values (BVs) ranged from −2.8 to +3.2 indicating that MUN could be changed by selection. The genetic correlation between MUN and percent true protein in milk was −0.22; −0.29 for J cows and −0.16 for HF cows. Should the relationship between MUN and UN observed in dietary manipulation studies hold similarly when MUN is manipulated by genetic selection, UN excretion could be reduced by 6.6 kg/cow per year in one generation of selection using sires with low MUN BVs. Although J cows had lower MUN than HF, total herd UN excretion may be similar for the same fixed feed supply because more J cows are required to utilise the available feed. The close relationship between blood plasma urea N concentration and MUN may enable early selection of bulls to breed progeny that excrete less UN.