Denitrifying woodchip bioreactors (WBRs) are increasingly used to manage the release of non‐point source nitrogen (N) by stimulating microbial denitrification. Woodchips serve as a renewable organic carbon (C) source, yet the recalcitrance of organic C in lignocellulosic biomass causes many WBRs to be C‐limited. Prior studies have observed that oxic–anoxic cycling increased the mobilization of organic C, increased nitrate (NO3−) removal rates, and attenuated production of nitrous oxide (N2O). Here, we use multi‐omics approaches and amplicon sequencing of fungal 5.8S‐ITS2 and prokaryotic 16S rRNA genes to elucidate the microbial drivers for enhanced NO3− removal and attenuated N2O production under redox‐dynamic conditions. Transient oxic periods stimulated the expression of fungal ligninolytic enzymes, increasing the bioavailability of woodchip‐derived C and stimulating the expression of denitrification genes. Nitrous oxide reductase (nosZ) genes were primarily clade II, and the ratio of clade II/clade I nosZ transcripts during the oxic–anoxic transition was strongly correlated with the N2O yield. Analysis of metagenome‐assembled genomes revealed that many of the denitrifying microorganisms also have a genotypic ability to degrade complex polysaccharides like cellulose and hemicellulose, highlighting the adaptation of the WBR microbiome to the ecophysiological niche of the woodchip matrix.