Winter wheat (Triticum aestivum L.) represents almost 50% of total cereal production in the European Union, accounting for approximately 25% of total mineral nitrogen (N) fertilizer applied to all crops. Currently, several active optical sensor (AOS) based systems for optimizing variable N fertilization are commercially available for a variety of crops, including wheat. To ensure successful adoption of these systems, definitive measurable benefits must be demonstrated. Nitrogen management strategies developed based on small-scale plot research are not always meaningful for large-scale farm conditions. In 2010–2012 (5 site-years) on-farm study was implemented in northern Poland utilizing a strip-trial design. The objective was to evaluate the performance of AOS in combination with a built-in algorithm for variable N rate fertilization. In this study, the reference uniform N rates (farmer’s practice) were comparable to optimum variable N rate recommendations. Side-by-side comparisons of uniform and variable N application revealed inconsistent benefits in terms of grain yield, grain protein content (GPC), N use and N use efficiency (NUE). Anticipated yield increases and/or reduced N rates are typical drivers for AOS adoption. Significant yield increases are not easily attained on farms with winter wheat yields already close to maximum yield potential. Thus, sensor-based variable N rate recommendations for fields previously fertilized with relatively low uniform N rates would often entail more appropriate allocation (redistribution) of the same amount of total N. This would minimize N surplus in areas of lower productivity and to improve the sustainability of N management overall.