AbstractThe ocean is an important source of nitrous oxide (N2O) to the atmosphere, yet the factors controlling N2O production and consumption in oceanic environments are still not understood nor constrained. We measured N2O concentrations and isotopomer ratios, as well as O2, nutrient and biogenic N2 concentrations, and the isotopic compositions of nitrate and nitrite at several coastal stations during two cruises off the Peru coast (~5–16°S, 75–81°W) in December 2012 and January 2013. N2O concentrations varied from below equilibrium values in the oxygen deficient zone (ODZ) to up to 190 nmol L−1 in surface waters. We used a 3‐D‐reaction‐advection‐diffusion model to evaluate the rates and modes of N2O production in oxic waters and rates of N2O consumption versus production by denitrification in the ODZ. Intramolecular site preference in N2O isotopomer was relatively low in surface waters (generally −3 to 14‰) and together with modeling results, confirmed the dominance of nitrifier‐denitrification or incomplete denitrifier‐denitrification, corresponding to an efflux of up to 0.6 Tg N yr−1 off the Peru coast. Other evidence, e.g., the absence of a relationship between ΔN2O and apparent O2 utilization and significant relationships between nitrate, a substrate during denitrification, and N2O isotopes, suggest that N2O production by incomplete denitrification or nitrifier‐denitrification decoupled from aerobic organic matter remineralization are likely pathways for extreme N2O accumulation in newly upwelled surface waters. We observed imbalances between N2O production and consumption in the ODZ, with the modeled proportion of N2O consumption relative to production generally increasing with biogenic N2. However, N2O production appeared to occur even where there was high N loss at the shallowest stations.