Phosphorus (P) loss from soils to water can be a major pressure on freshwater quality and dairy farming, with higher animal stocking rates, may lead to potentially greater nutrient source pressures. In many countries with intensive agriculture, regulation of P management aims to minimise these losses. This study examined the P transfer continuum, from source to impact, in a dairy-dominated, highly stocked, grassland catchment with free-draining soils over three years. The aim was to measure the effects of P source management and regulation on P transfer across the nutrient transfer continuum and subsequent water quality and agro-economic impacts. Reduced P source pressure was indicated by: (a) lower average farm-gate P balances (2.4 kg ha−1 yr−1), higher P use efficiencies (89%) and lower inorganic fertilizer P use (5.2 kg ha−1 yr−1) relative to previous studies; (b) almost no recorded P application during the winter closed period, when applications were prohibited, to avoid incidental transfers; and (c) decreased proportions of soils with excessive P concentrations (32–24%). Concurrently, production and profitability remained comparable with the top 10% of dairy farmers nationally with milk outputs of 14,585 l ha−1, and gross margins of € 3130 ha−1. Whilst there was some indication of a response in P delivery in surface water with declines in quick flow and interflow pathway P concentrations during the winter closed period for P application, delayed baseflows in the wetter third year resulted in elevated P concentrations for long durations and there were no clear trends of improving stream biological quality. This suggests a variable response to policy measures between P source pressure and delivery/impact where the strength of any observable trend is greater closer to the source end of the nutrient transfer continuum and a time lag occurs at the other end. Policy monitoring and assessment efforts will need to be cognisant of this.