Shortcut nitrogen removal, that is, removal via formation and reduction of nitrite rather than nitrate, has been observed in membrane-aerated biofilms (MABs), but the extent, the controlling factors, and the kinetics of nitrite formation in MABs are poorly understood. We used a special MAB reactor to systematically study the effects of the dissolved oxygen (DO) concentration at the membrane surface, which is the biofilm base, on nitrification rates, extent of shortcut nitrification, and microbial community structure. The focus was on anoxic bulk liquids, which is typical in MAB used for total nitrogen (TN) removal, although aerobic bulk liquids were also studied. Nitrifying MABs were grown on a hollow-fiber membrane exposed to 3 mg N/L ammonium. The MAB intra-membrane air pressure was varied to achieve different DO concentrations at the biofilm base, and the bulk liquid was anoxic or with 2 g m−3 DO. With 2.2 and 3.5 g m−3 DO at the biofilm base, and with an anoxic bulk-liquid, the ammonium fluxes were 0.75 and 1.0 g N m−2 day−1, respectively, and nitrite was the main oxidized nitrogen product. However, with membrane DO of 5.5 g m−3, and either zero or 2 g m−3 DO in the bulk, the ammonium flux was around 1.3 g N m−2 day−1, and nitrate flux increased significantly. For all experiments, the cell density of ammonium oxidizing bacteria (AOB) was relatively uniform throughout the biofilm, but the density of nitrite oxidizing bacteria (NOB) decreased with decreasing biofilm DO. Among NOB, Nitrobacter spp. were dominant in biofilm regions with 2 g m−3 DO or greater, while Nitrospira spp. were dominant in regions with less than 2 g m−3 DO. A biofilm model, including AOB, Nitrobacter spp., and Nitrospira spp., was developed and calibrated with the experimental results. The model predicted the greatest extent of nitrite formation (95%) and the lowest ammonium oxidation flux (0.91 g N m−2 day−1) when the membrane DO was 2 g m−3 and the bulk liquid was anoxic. Conversely, the model predicted the lowest extent of nitrite formation (40%) and the highest ammonium oxidation flux (1.5 g N m−2 day−1) when the membrane-DO and bulk-DO were 8 g m−3 and 2 g m−3, respectively. The estimated kinetic parameters for Nitrospira spp., revealed a high affinity for nitrite and oxygen. This explains the dominance of Nitrospira spp. over Nitrobacter spp. in regions with low nitrite and oxygen concentrations. Our results suggest that shortcut nitrification can effectively be controlled by manipulating the DO at the membrane surface. A tradeoff is made between increased nitrite accumulation at lower DO, and higher nitrification rates at higher DO. Biotechnol. Bioeng. © 2008 Wiley Periodicals, Inc.