Stagonospora nodorum blotch (SNB), caused by the fungus Parastagonospora nodorum, is a major disease of wheat (Triticum aestivum). Residue from a previously infected wheat crop can be an important source of initial inoculum, but the effects of infected residue on disease severity and yield have not previously been quantified. Experiments were conducted in Raleigh and Salisbury, North Carolina, in 2012, 2013, and 2014 using the moderately susceptible winter wheat cultivar DG Shirley. In 2014, the highly susceptible cultivar DG 9012 was added to the experiment and the study was conducted at an additional site in Tyner, North Carolina. Four (2012) or six (2013 and 2014) wheat residue treatments were applied in the field in a randomized complete block design with five replicates. Treatments in 2012 were 0, 30, 60, and 90% residue coverage of the soil surface, while 10 and 20% residue treatments were added in 2013 and 2014. Across site-years, disease severity ranged from 0 to 50% and increased nonlinearly (P < 0.05) as residue level increased, with a rapid rise to an upper limit and showing little change in severity above 20 to 30% soil surface coverage. Residue coverage had a significant (P < 0.05) effect on disease severity in all site-years. The effect of residue coverage on yield was only significant (P < 0.05) for DG Shirley at Raleigh and Salisbury in 2012 and for DG 9012 at Salisbury in 2014. Similarly, residue coverage significantly (P < 0.05) affected thousand-kernel weight only of DG 9012 in 2014 at Raleigh and Salisbury. Our results showed that when wheat residue was sparse, small additions to residue density produced greater increases in SNB than when residue was abundant. SNB only led to effects on yield and test weight in the most disease-conducive environments, suggesting that the economic threshold for the disease may be higher than previously assumed and warrants review.