The sustainability of rainfed crops under semiarid conditions is threatened by low plant nitrogen (N) recovery as well as the potential loss of reactive N to the environment. A field 15N tracing experiment on barley (Hordeum vulgare L.) under rainfed conditions was carried out to study how different tillage management practices and the use of the nitrification inhibitor DMPSA affected the fate of N. The experiment consisted of a factorial combination of tillage (i.e., no tillage, NT, and conventional tillage, T) and fertilizer treatments (unfertilized control and ammonium nitrate, AN, with or without DMPSA). Single-labelled ammonium nitrate (15NH4NO3, 15AN, or NH415NO3, A15N) was applied at top-dressing to microplots at a rate of 80 kg N ha−1. Our results show out that DMPSA modulates the nitrification process from both fertilizer-N and endogenous soil-N (which was the main contributor to plant N uptake and N2O emissions), affecting soil residual N at the end of the cropping period (i.e., higher topsoil retention of 15AN in DMPSA-amended plots). Generally, cumulative N2O emissions from fertilizer were derived from 15AN rather than from A15N, thus confirming the site-specific choice of the source of synthetic N as an effective N2O mitigation strategy. Two months after harvest, a rewetting event produced a remarkable N2O emission peak that drove total cumulative N2O emissions and was also mainly derived from endogenous N. These results suggest that dry seasons could decrease N2O losses after fertilization while causing critical peaks after rewetting, thus potentially limiting the effectiveness of mitigation strategies. The average plant N recovery from the synthetic fertilizer was 22.6%, while the use of DMPSA combined with NT enhanced plant N uptake from endogenous soil-N. This could be a result of the improved crop development and plant N acquisition under NT, consistent with the decrease of soil N retention for A15N in the deeper layer at the end of the experiment in the nontilled plots. This study contributes to the mechanistic understanding of the effect of nitrification inhibitors and tillage on N2O emissions, soil N dynamics and N plant recovery, revealing relevant effects of both management strategies and a critical role of endogenous soil-N under dry rainfed conditions. It can be concluded that, under the conditions of our study, combining DMPSA with NT could help to improve plant N recovery, thus resulting in positive impacts on reactive N loss and climate change mitigation and adaptation.