Drained agricultural peatlands are being increasingly rewetted for global warming mitigation. This creates novel ecosystems, with unclear effects on nitrogen cycling. Therefore, we aim to understand the impact of rewetting on nitrous oxide (N2O) production and its sources. Soil samples from pairs of sites differing in water regime (drained [D] and rewetted [W]) and peatland type (coastal fen [C], percolation fen [P] and alder forest [A]) in North-Eastern Germany were analyzed for microbial production pathways of N2O using the dual-isotope method with four tracers (H218O, N18O3−, 15NO3−, 15NH4+) in a laboratory incubation experiment. Unexpectedly, the largest N2O fluxes were found for rewetted sites. In four sites, denitrification dominated N2O production (80—90%). Only CW and AD displayed almost equal contributions of N2O from NO3− and NH4+, showing also largest maximum contributions of nitrifier denitrification (44–48%). Nitrification contributed less than 8% in all soils. Less than 20% of N2O was from nitrification-coupled denitrification. Soil samples with high initial water content, requiring drying prior to preincubation, displayed largest emissions, irrespective of peatland type or field water regime. Interestingly, if field conditions were dry and water was added for the preincubation, the contribution of nitrifiers to N2O production was increased, in line with larger concentrations of NO3−. The results confirm the enhancing effect of drainage on N2O fluxes. However, they also indicate a legacy effect of previous conditions on sources of N2O. Overall, short-term changes in water content had strong effects on fluxes, but not sources of N2O.