Since transgenic cotton was first grown commercially in India in 1996, the areas cultivated have increased rapidly around the world. Bt cotton is produced by inserting a synthetic version of a gene from the naturally occurring soil bacterium Bacillus thuringiensis into cotton. Bt cotton may affect nutrient dynamics, enzymatic activities, AM fungi and yield in many ways during its life span with regard to the temporal-spatial relevance of Bt proteins. Although there is concern that transgenic Bt-crops which release Bt-toxins into the environment affect nutrient cycling in the agro ecosystem. But from the experimental result it is evident that Bt- cotton significantly changes few essential ecosystem functions such as nutrient mineralization with reference to nitrogen and potassium, and dehydrogenase activity. The overall conclusion is that although there are effects of the Bt trait on soil microbial and faunal communities, there were some positive or no negative effects of Bt-cotton on the studied indicators, and therefore cultivation of Bt cotton appears to be no risk to soil ecosystem functions.