We evaluated the effect of chemical fertilizer and manure applications on N2O emission from a managed grassland by establishing three treatment plots of chemical N fertilizer (chemical fertilizer), manure combined with chemical N fertilizer (manure) and no N fertilizer (control) at the Shizunai Experimental Livestock Farm in southern Hokkaido, Japan. The N2O fluxes from the soils were measured using a closed-chamber method from May 2005 to April 2008. Soil denitrifying enzyme activity (DEA) in the root-mat layer (0–2.5 cm) and in the mineral soil layer (2.5–5 cm) of each treatment plot was measured using an acetylene inhibition method after treatment with NO3−-N addition, glucose addition, both NO3−-N and glucose addition or neither NO3−-N nor glucose addition. Annual N2O emission ranged from 0.6 to 4.9 kg N2O-N ha−1year−1, with the highest emission observed in the manure plot and the lowest in the control plot. The chemical fertilizer induced emission factor (EF) (range: 0.85–1.32%) was significantly higher than the manure-induced EF (range: 0.35–0.85%). The denitrification potential of the soil horizons was measured with the addition of both NO3−-N and glucose, and was significantly higher in root-mat soil than in mineral soil. Soil DEA in the root mat with the addition of NO3−-N with and without the addition of glucose had a significantly positive correlation with soil pH (P < 0.05). Soil pH was significantly influenced by N source, which was significantly lower in the chemical fertilizer plot than in the control and manure plots. For a fixed quantity of available N, the application of manure could result in higher N2O emission compared with chemical fertilizer, owing to higher soil pH values under manure application than under chemical fertilizer application.