Environmental stress is the main cause of the decline of species diversity in low-productive fen meadows in the Netherlands. Attempts to restore species diverse fen meadows e.g. by sod cutting frequently fail. We supposed that unsuccessful efforts are due to ignoring the impact of environmental stress on the performance of soil biota, which play a key role in N-immobilization and keeping available-N for primary production low. We investigated both pristine and degraded natural sites and successfully and unsuccessfully restored sites of poor and rich fen meadows. We determined plant species composition, soil chemical properties, N-pools in soil biota, N-mineralization rates, and N-fluxes. In pristine rich and poor fen meadows, mineral-N was poorly available for primary production due to a strong N-immobilization by soil biota. Annual N-immobilization fluxes exceeded by far the annual N-harvest by primary production. N-immobilization in pristine fens was higher than in degraded fens. In successfully restored rich fens, net N-mineralization was lower and N-immobilization higher than in the unsuccessful category. From our results, we derived the hypothesis that in degraded or in unsuccessfully restored fens the soils internal N-balance shifted from N-immobilization to net N-mineralization, favoring biomass production but disadvantaging plant species diversity. N-retention driven by an active N-immobilizing soil biological community, is likely a decisive process for successful recovery of plant species diversity in low productive fen meadows. We recommend that restoration techniques should stimulate a functionally diverse soil fauna, as this may enhance the storage of available nutrients in the soil food web.