In tropical livestock production, forage availability and quality are a serious constraint for milk and meat production. There is an urgent need to reduce the environmental impact of animal production while increasing productivity. The use of legume trees or shrubs associated with grasses effectively increased milk production and decreased the need to use nitrogen fertilizers by taking advantage of atmospheric nitrogen fixation. The objective was to evaluate milk production, N2-fixation and N transfer, forage yield and composition (under two cutting intervals) in a silvopastoral system (SPS) with Leucaena leucocephala-Megathyrsus maximus and M. maximus-monoculture (MMM) with crossbred cows in a completely randomized design. Forage yield in the SPS was 6490 and 6907 kg DM ha−1 for cutting intervals (CI) of 35 and 50 days. Forage yield for the MMM was 7284 and 10,843 kg DM ha−1, and forage crude protein (CP) was 29.0% and 26.1% for L. leucocephala, harvested at 35 and 50 days, respectively. CP for the associated M. maximus was 9.9% and 7.8% for CI 35 and 50 days, respectively, and for MMM was 7.4% and 8.4%, harvested at 35 and 50 days. Milk production was 4.7 kg cow−1 day−1 for cows grazing MMM and 7.4 kg cow−1 day−1 under SPS. Nitrogen fixation in L. leucocephala (%Ndfa) was estimated to be 89% and 95%, at 35 and 50 days, with an N2 transfer to the associated grass of 34.3% and 52.9%. SPS has the potential to fix and transfer important amounts of N2 to the associated grass, and increase forage CP content and milk production.