Invasive plants can increase soil nitrogen (N) pools and accelerate soil N cycling rates, but their effect on gross N cycling and nitrous oxide (N2O) emissions has rarely been studied. We hypothesized that perennial pepperweed (Lepidium latifolium) invasion would increase rates of N cycling and gaseous N loss, thereby depleting ecosystem N and causing a negative feedback on invasion. We measured a suite of gross N cycling rates and net N2O fluxes in invaded and uninvaded areas of an annual grassland in the Sacramento‐San Joaquin River Delta region of northern California. During the growing season, pepperweed‐invaded soils had lower microbial biomass N, gross N mineralization, dissimilatory nitrate reduction to ammonium (DNRA), and denitrification‐derived net N2O fluxes (P < 0.02 for all). During pepperweed dormancy, gross N mineralization, DNRA, and denitrification‐derived net N2O fluxes were stimulated in pepperweed‐invaded plots, presumably by N‐rich litter inputs and decreased competition between microbes and plants for N (P < 0.04 for all). Soil organic carbon and total N concentrations, which reflect pepperweed effects integrated over longer time scales, were lower in pepperweed‐invaded soils (P < 0.001 and P = 0.04, respectively). Overall, pepperweed invasion had a net negative effect on ecosystem N status, depleting soil total N to potentially cause a negative feedback to invasion in the long term.