Nitrogen (N) deposition and biodiversity loss are important drivers of global change, with uncertain consequences for carbon (C) and nutrient turnover in terrestrial ecosystems. We evaluated the simultaneous effects of N deposition and plant diversity on litter decomposition within a temperate forest in Patagonia. We identified ‘tree triangles’ created by the intersection of three tree-canopies that directly controlled micro-environmental conditions on the forest floor, and combined it with an N addition treatment. Triangles were composed of one or three Nothofagus species (N. dombeyi, N. obliqua or N. nervosa). We placed litterbags containing litter of each of the Nothofagus species and litterbags containing a mixture of the three species within all triangles and assessed mass loss over 2 years. We used a standard litter type in all triangles to independently evaluate triangle effects on decomposition. N addition had strong and positive effects on decomposition with an average 46% increase in the decomposition constant. Litter species significantly differed in their response to N addition; litter with higher lignin content and lower labile C content had larger increase in decomposition due to fertilization. Also, N addition disrupted two types of species interactions that control decomposition. The affinity relation between litter and decomposers, that enhanced decomposition of home litter (‘home-field advantage’) that was demonstrated to be significant for all three Nothofagus species, disappeared with N addition. Second, N addition modified litter species interactions, transforming neutral effects of litter mixtures to positive, nonadditive effects on mass loss. Finally, N addition stimulated N release from decomposing litter which was modulated by plant species effects. Together, these results suggest that N addition to unpolluted forests increases C loss, contrary to what has been observed for temperate forests in industrialized areas of the world, and that alterations in nutrient pools have effects on species interactions, including the elimination of affinity effects for decomposition.