Abstract. Nitrous oxide (N2O) emissions from permafrost-affected terrestrial ecosystems have received little attention, largely because they have been thought to be negligible. Recent studies, however, have shown that there are habitats in subarctic tundra emitting N2O at high rates, such as bare peat surfaces on permafrost peatlands. The processes behind N2O production in these high-emitting habitats are, however, poorly understood. In this study, we established an in situ 15N-labelling experiment with the main objectives to partition the microbial sources of N2O emitted from bare peat surfaces (BP) on permafrost peatlands and to study the fate of ammonium and nitrate in these soils and in adjacent vegetated peat surfaces (VP) showing low N2O emissions. Our results confirm the hypothesis that denitrification is mostly responsible for the high N2O emissions from BP surfaces. During the study period denitrification contributed with ~79 % of the total N2O emission in BP, while the contribution of ammonia oxidation was less, about 19 %. However, nitrification is a key process for the overall N2O production in these soils with negligible external nitrogen (N) load because it is responsible for nitrite/nitrate supply for denitrification, as also supported by relatively high gross nitrification rates in BP. Generally, both gross N mineralization and gross nitrification rates were much higher in BP with high N2O emissions than in VP, where the high C / N ratio together with low water content was likely limiting N mineralization and nitrification and, consequently, N2O production. Also, competition for mineral N between plants and microbes was additionally limiting N availability for N2O production in VP. Our results show that multiple factors control N2O production in permafrost peatlands, the absence of plants being a key factor together with inter-mediate to high water content and low C / N ratio, all factors which also impact on gross N turnover rates. The intermediate to high soil water content which creates anaerobic microsites in BP is a key N2O emission driver for the prevalence of denitrification to occur. This knowledge is important for evaluating future permafrost –N feedback loops from the Arctic.