We examined nitrogen cycling over a 1‐yr period in shallow, sandy sediments at two contrasting sites near a barrier island in the northeastern Gulf of Mexico, and we provide here the direct determination of dinitrogen gas (N2) production at ambient nitrate concentrations in permeable marine sediments. Nitrogen‐stable isotope tracer techniques were used to quantify N2‐production rates and pathways in sediment cores and slurries. To simulate pore‐water advection, the dominant transport process in the upper layer of the permeable sand beds, intact sediment cores were perfused with aerated seawater. This perfusion increased denitrification rates up to 2‐fold in Apalachicola Bay sands and up to 17‐fold in Gulf of Mexico sublittoral sands, respectively, relative to static cores. Seasonal N2‐production rates were highest in spring and fall. Denitrified nitrate originated almost entirely from benthic nitrification at the exposed Gulf site, whereas water‐column nitrate dominated sedimentary denitrification at the sheltered Bay site. Sediment incubations in stirred chambers were used to determine net fluxes of oxygen (O2), N2, nitrate, and ammonium across the sediment‐water interface during varied degrees of continuous pore‐water exchange. Rates of N2 efflux correlated with rates of pore‐water flow increasing from 0.12 mmol N m‐2 d‐1 under diffusion‐limited transport conditions up to 0.87 mmol N m‐2 d‐1 with pore‐water advection. Mineralized nitrogen was completely converted to N2 gas in Gulf of Mexico sediments. Our results demonstrate that advective pore‐water circulation will accelerate benthic N2 production by coupled nitrification‐ denitrification and that substantial nitrogen loss occurs from coastal permeable sediments.