Gross rates of nitrogen (N) turnover inform about the total N release and consumption. We investigated how plant diversity affects gross N mineralization, microbial ammonium (NH4+) consumption and gross inorganic N immobilization in grasslands via isotopic pool dilution. The field experiment included 74 plots with 1–16 plant species and 1–4 plant functional groups (legumes, grasses, tall herbs, small herbs). We determined soil pH, shoot height, root, shoot and microbial biomass, and C and N concentrations in soil, microbial biomass, roots and shoots. Structural equation modeling (SEM) showed that increasing plant species richness significantly decreased gross N mineralization and microbial NH4+ consumption rates via increased root C:N ratios. Root C:N ratios increased because of the replacement of legumes (low C:N ratios) by small herbs (high C:N ratios) and an increasing shoot height, which was positively related with root C:N ratios, with increasing species richness. However, in our SEM remained an unexplained direct negative path from species richness to both N turnover rates. The presence of legumes increased gross N mineralization, microbial NH4+ consumption and gross inorganic N immobilization rates likely because of improved N supply by N2 fixation. The positive effect of small herbs on microbial NH4+ consumption and gross inorganic N immobilization could be attributed to their increased rhizodeposition, stimulating microbial growth. Our results demonstrate that increasing root C:N ratios with increasing species richness slow down the N cycle but also that there must be additional, still unidentified processes behind the species richness effect potentially including changed microbial community composition.