Professor Edward Cocking, director of the university's Centre for Crop Nitrogen Fixation, made the breakthrough when he found that a strain of nitrogen-fixing bacterium in sugarcane was able colonise all major crop plants.
The centre has since developed a technique, known as N-Fix, to apply the bacterium to all the the plant's cells using a seed coating.
Over the last 10 years, it has conducted extensive research in the laboratory, growth rooms and glasshouses, to confirm the effect.
Professor Cocking said: "Helping plants to naturally obtain the nitrogen they need is a key aspect of world food security. The world needs to unhook itself from its ever-increasing reliance on synthetic nitrogen fertilisers, which have high economic and environmental costs."
Dr Susan Huxtable, director of intellectual property commercialisation at the university, said: "N-Fix has the power to transform agriculture, while offering a significant saving to the grower through the reduced costs of fertilisers. It is a great example of how university research can have a world-changing impact."
The N-Fix technology has been licensed by the University of Nottingham to Azotic Technologies to develop and commercialise globally. Azotic is now working on field trials in order to produce robust efficacy data before seeking regulatory approval in the UK and worldwide.
It anticipates that N-Fix will be commercially available "within the next two to three years".