MILD-oxy combustion operates conventional oxy-combustion processes under moderate or intense low-oxygen dilution (MILD) condition, which offers a practical approach towards the synergetic control of CO2 and NOx emissions. This numerical work investigates the MILD combustion characteristics and NO emission of CH4/NH3 fuel blend under N2, CO2 and H2O dilutions, aiming at revealing the fuel-NO formation mechanism under MILD-oxy condition. It is found that relative to MILD-N2 combustion, the flame temperature is reduced under MILD-CO2 and MILD-H2O combustion, while the reaction zone is expanded and reduced, respectively, due to the altered co-flow properties. CO2 dilution lowers the radical pool level, while the formation of OH radical is boosted under H2O dilution. Overall NO emission (EINO) under MILD-N2 combustion is the largest while that under MILD-H2O generates the lowest value, showing its low-NOx emissions superiority. NH3 is converted into NO via routes NH3 → NH2 → HNO → NO and NH3 → NH2 → NH → HNO → NO under MILD-CO2 combustion. By contrast, the importance of route NH3 → NH2 → NH → N → NO in producing NO is largely strengthened under MILD-H2O combustion, wherein the direct formation of NO via HNO is inhibited with the enhanced availability of reactive N-containing species, contributing to lower NO emission under MILD-H2O combustion over MILD-CO2 combustion.