Digestate is considered as an option for recycling resources and a part of the substitution for chemical fertilizers to reduce environmental impacts. However, its application may lead to significant nitrous oxide (N2O) emissions because of its high concentration of ammonium and degradable carbon. The research objectives are to evaluate how N2O emissions respond to digestate as compared to urea application and whether this depends on soil properties and moisture. Either digestate or urea (100 mg N kg−1) was applied with and without a nitrification inhibitor of 3,4-dimethylpyrazole phosphate (DMPP) to three soil types (fluvo-aquic soil, black soil, and latosol) under three different soil moisture conditions (45, 65, and 85% water-filled pore space (WFPS)) through microcosm incubations. Results showed that digestate- and urea-induced N2O emissions increased exponentially with soil moisture in the three studied soils, and the magnitude of the increase was much greater in the alkaline fluvo-aquic soil, coinciding with high net nitrification rate and transient nitrite accumulation. Compared with urea-amended soils, digestate led to significantly higher peaks in N2O and carbon dioxide (CO2) emissions, which might be due to stimulated rapid oxygen consumption and mineralized N supply. Digestate-induced N2O emissions were all more than one time higher than those induced by urea at the three moisture levels in the three studied soils, except at 85% WFPS in the fluvo-aquic soil. DMPP was more effective at mitigating N2O emissions (inhibitory efficacy: 73%–99%) in wetter digestate-fertilized soils. Overall, our study shows the contrasting effect of digestate to urea on N2O emissions under different soil properties and moisture levels. This is of particular value for determining the optimum of applying digestate under varying soil moisture conditions to minimize stimulated N2O emissions in specific soil properties.