The attribution of nitrous oxide (N2O) emission to organic and inorganic N fertilizers requires understanding of how these inputs affect the two biological processes, i.e. denitrification and nitrification. Contradictory findings have been reported when the effects of organic and inorganic fertilizers on nitrous oxide emission were compared. Here we aimed to contribute to the understanding of such variation using 15N-labelling techniques. We determined the processes producing N2O, and tested the effects of soil moisture, N rates, and the availability of organic matter. In a pot experiment, we compared soil treated with biogas waste (BGW) and mineral ammonium sulphate (Min-N) applied at four rates under two soil moisture regimes. We also tested biogas waste, conventional cattle slurry and mineral N fertilizer in a grassland field experiment. During the first 37 days after application we observed N2O emissions of 5.6 kg N2O-N ha−1 from soils supplied with biogas waste at a rate of 360 kg N ha−1. Fluxes were ca. 5-fold higher at 85% than at 65% water holding capacity (WHC). The effects of fertilizer types and N rates on N2O emission were significant only when the soil moisture was high. Organic fertilizer treated soils showed much higher N2O emissions than those receiving mineral fertilizer in both, pot and field experiment. Over all the treatments the percentage of the applied N emitted as N2O was 2.56% in BGW but only 0.68% in Min-N. In the pot experiment isotope labelling indicated that 65–95% of the N2O was derived from denitrification for all fertilizer types. However, the ratio of denitrification/nitrification derived N2O was lower at 65% than at 85% WHC. We speculate that the application of organic matter in conjunction with ammonium nitrogen first leads to a decrease in denitrification-derived N2O emission compared with soil receiving mineral fertilizer. However, at later stages when denitrification becomes C-limited, higher N2O emissions are induced when the soil moisture is high. Copyright © 2009 John Wiley & Sons, Ltd.