An 87‐day incubation experiment was conducted to investigate the effects of various water levels on the soil nitrogen content in an inland salt marsh of Xianghai, China. Soil samples were collected from depths in the range of 0 to 30 cm at 10‐cm intervals after 15, 54 and 87 days of incubation. The total nitrogen (TN), available nitrogen, nitrate nitrogen (NO3−‐N) and ammonium nitrogen (NH4+‐N) contents and the nitrogen activation coefficient (NAC) were measured to investigate the soil nitrogen dynamics under three inundation treatments (−5, 0 and 5 cm). The results showed that TN was generally accumulated in all soil layers and exhibited a peak value in subsurface soils at the −5‐cm inundation level at the end of the incubation period, whereas no obvious changes were observed in the TN contents in the bottom soils at the three inundation levels. Compared with the initial contents in the soils, the NO3−‐N and NH4+‐N contents were significantly reduced in all soil layers at the 0‐cm and the 5‐cm inundation levels at the end of the incubation period. In general, the available nitrogen content was higher in the surface soils compared with the deeper soils at all inundation levels. The NAC values exhibited a pronounced change in the subsurface soils at all inundation levels, decreasing significantly from 0.17 to 0.04 at the 5‐cm inundation level; however, a higher mean NAC value (0.126) was found over the incubation period at the 0‐cm inundation level compared with the 5‐cm and the −5‐cm inundation levels. Nitrogen was released from plants into the soil under all inundation treatments over the incubation period. The soil organic matter exerted positive loadings on the TN and NO3−‐N contents and negative loadings on the NH4+‐N content at all inundation levels, and the water content generally exhibited a negative relationship with all forms of nitrogen. Additionally, the total phosphorus content exhibited a positive correlation with the TN and NO3−‐N contents. Copyright © 2013 John Wiley & Sons, Ltd.