Intercropping legumes with cereals can lead to increased overall yield and optimize the utilization of resources such as water and nutrients, thus enhancing agricultural efficiency. Legumes possess the unique ability to acquire nitrogen (N) through both N-2 fixation and from the available N in the soil. However, soil N can diminish the N-2 fixation capacity of legumes. It is postulated that in intercropping, legumes uptake N mainly through N-2 fixation, leaving more soil N available for cereals. The latter, in turn, has larger root systems, allowing it to explore greater soil volume and absorb more N, mitigating its adverse effects on N-2 fixation in legumes. The goal of this study was to evaluate how the supply of N affects the intercropping of faba beans (Vicia faba L.) and peas (Pisum sativum L.) with wheat under varying plant densities and N levels. We measured photosynthetic traits, biomass production, the proportion of N derived from air (%Ndfa) in the shoot of the legumes, the N transferred to the wheat, and the land equivalent ratio (LER). The results revealed a positive correlation between soil N levels and the CO2 assimilation rate (An), chlorophyll content, and N balance index (NBI) in wheat. However, no significant effect was observed in legumes as soil N levels increased. Transpiration (E) increased in wheat intercropped with legumes, while stomatal conductance (g(s)) increased with N addition in all crops. Water use efficiency (WUE) decreased in faba beans intercropped with wheat as N increased, but it showed no significant change in wheat or peas. The shoot dry matter of wheat increased with the addition of N; however, the two legume species showed no significant changes. N addition reduced the %Ndfa of both legume species, especially in monoculture, with peas being more sensitive than faba beans. The intercropping of wheat alleviated N-2 fixation inhibition, especially at high wheat density and increased N transfer to wheat, particularly with peas. The LER was higher in the intercropping treatments, especially under limited N conditions. It is concluded that in the intercropping of wheat with legumes, the N-2 fixation inhibition caused by soil N is effectively reduced, as well as there being a significant N transfer from the legume to the wheat, with both process contributing to increase LER.