The electrochemical urea oxidation reaction (UOR) to N2 represents an efficient route to simultaneous nitrogen removal from N‐enriched waste and production of renewable fuels at the cathode. However, the overoxidation of urea to NOx− usually dominates over its oxidation to N2 at Ni(OH)2‐based anodes. Furthermore, detailed reaction mechanisms of UOR remain unclear, hindering the rational catalyst design. We found that UOR to NOx− on Ni(OH)2 is accompanied by the formation of near stoichiometric amount of cyanate (NCO−), which enabled the elucidation of UOR mechanisms. Based on our experimental and computational findings, we show that the formation of NOx− and N2 follows two distinct vacancy‐dependent pathways. We also demonstrate that the reaction selectivity can be steered towards N2 formation by altering the composition of the catalyst, e.g., doping the catalyst with copper (Ni0.8Cu0.2(OH)2) increases the faradaic efficiency of N2 from 30 % to 55 %.