Warm‐climate grasslands are often N limited. Legume litter decomposition can contribute significantly to N input in grazing systems, but its contribution depends on litter deposition, decomposition, and chemical composition. We evaluated these responses for 2 yr in unfertilized (BG) and fertilized (BGN; 50 kg N ha−1) bahiagrass (Paspalum notatum Flügge) monocultures and in mixed swards of bahiagrass plus the legume rhizoma peanut (Arachis glabrata Benth.). Legume–grass mixture litter had greater initial N concentration (26 g N kg−1 organic matter [OM]) and lower C/N ratio (22) than BG and BGN, which did not differ from each other (18 g N kg−1 OM, C/N ratio of 31). Litter biomass relative decay rate was greater for mixtures than for bahiagrass monocultures. As a result, less biomass and N remained at the end of incubation in mixtures (62 and 76%, respectively) than in monocultures (69 and 80%, respectively). Litter deposition rate was similar across treatments, but faster decomposition and greater N concentration for legume–grass mixtures resulted in larger litter N release than in monocultures (44 and 26 kg ha−1, respectively). At the end of incubation, remaining litter biomass and remaining N decreased with increasing litter legume proportion, whereas litter N concentration and litter decay rate increased. Results indicate that legume–grass mixtures are an alternative to N fertilizer for increasing N cycling through plant litter in grasslands, and although litter deposition rates were similar across treatments, increasing legume proportion in mixtures is likely to be associated with greater litter N release.