Inoculation of legumes under field conditions with superior nitrogen-fixing rhizobia does not always result in the desired yield increase. Often it is observed that the inoculum strain fails to occupy a significant proportion of the nodules. The introduced inoculant strains have to compete with the indigenous, often ineffective, nitrogen-fixing rhizobial population at different levels. The success of inoculation depends to a large extent on the ratio of the inoculant cells to indigenous rhizobia. However, intrinsic characteristics of the inoculant and indigenous rhizobia, and their responses to abiotic and biotic environmental variables, also influence the outcome of inoculation. In this review, the genetic basis for “efficient host-bacteria interaction” is reviewed. In addition, environmental factors that influence competition and saprophytic competence of rhizobia are discussed.