Emissions of the trace gas nitrous oxide (N2O) play an important role for the greenhouse effect and stratospheric ozone depletion, but the impacts of climate change on N2O fluxes and the underlying microbial drivers remain unclear. The aim of this study was to determine the effects of sustained climate change on field N2O fluxes and associated microbial enzymatic activities, microbial population abundance and community diversity in an extensively managed, upland grassland. We recorded N2O fluxes, nitrification and denitrification, microbial population size involved in these processes and community structure of nitrite reducers (nirK) in a grassland exposed for 4 years to elevated atmospheric CO2 (+200 ppm), elevated temperature (+3.5 °C) and reduction of summer precipitations (−20%) as part of a long-term, multifactor climate change experiment. Our results showed that both warming and simultaneous application of warming, summer drought and elevated CO2 had a positive effect on N2O fluxes, nitrification, N2O release by denitrification and the population size of N2O reducers and NH4 oxidizers. In situ N2O fluxes showed a stronger correlation with microbial population size under warmed conditions compared with the control site. Specific lineages of nirK denitrifier communities responded significantly to temperature. In addition, nirK community composition showed significant changes in response to drought. Path analysis explained more than 85% of in situ N2O fluxes variance by soil temperature, denitrification activity and specific denitrifying lineages. Overall, our study underlines that climate-induced changes in grassland N2O emissions reflect climate-induced changes in microbial community structure, which in turn modify microbial processes.