Nitrogen is the second limited factor in arid regions. Little information is available on soil N cycling and availability under grazing in arid regions, which is required to evaluate land‐use management with respect to soil N availability and dynamics. In 2011, we established a rotational grazing field experiment in arid grassland. We conducted experiments to explore the effects of herbivores grazing on soil net N mineralization and N processes via changes in soil temperature, moisture, pH, and microbial biomass nitrogen (MBN) in 2016 and 2017. Our results showed that grazing did not alter soil N mineralization because higher soil moisture and soil MBN under grazing had positive and negative effects on soil N mineralization, thereby balancing soil N mineralization. Plant N uptake at the grazing plots was, nevertheless, 23% higher than that at the non‐grazing plots. These demonstrated that grazing potentially improved soil inorganic N availability and alleviated soil N limitation in arid regions. Soil nitrification was main pathway of N transformation in arid regions. Grazing improved soil accumulation of NO3− content, resulting in environmental problems (such as N2O emission and N leaching); however, grazing had a little effect (~15% increase) on soil N leaching and (~7% decrease) on N2O emission. These N processes reflect important mechanisms of resilience and ecosystem stability under grazing in an N‐limited environment. Our results provide an important perspective for grassland management, aiming to maintain soil N supplying capacity in annual pasture sustainably. Overall, our study suggests that grazing is an effective management practice for the sustainable usage of local grasslands, as it improves soil physicochemical and biological properties, which, in turn, increases N supply.