AbstractEstuaries emit a large but highly uncertain amount of Nitrous oxide (N2O) into the atmosphere. To better understand N2O cycling processes in estuaries, we provide the first direct observations of N2O consumption in the seasonally anoxic Chesapeake Bay, the largest estuary in the United States. N2O consumption rates in anoxic waters reached up to 3.3 nmol L−1 d−1 but were generally undetectable in oxygenated waters. However, N2O consumption rates were substantially enhanced when the oxygen concentration was experimentally decreased in initially oxygenated samples, indicating the potential of N2O consumption in oxygenated environments, for example, surface waters. These potential N2O consumption rates followed Michaelis‐Menten kinetics as a function of increasing N2O substrate concentration. N2O‐consuming microbes that predominantly contained the clade II nitrous oxide reductase gene were detected throughout the water column. These new observations of environmental controls on N2O consumption will benefit the modeling of N2O cycling and help to constrain the estuarine N2O flux.