Global climate changes and anthropogenic activities degrade them ecosystems, which strongly changes net nitrogen (N) mineralization in alpine grasslands, and, thus, makes them even more limited by available N. Our objective was to examine the soil gross N mineralization and nitrification depending on degradation stages in them on the example of the Tibetan Plateau. We used the in situ15N isotope dilution to quantify the gross N mineralization and nitrification of soil in three degradation stages: i) 0–5 and 5–10 cm depth of soil covered by Kobresia pygmaea community (non degraded), ii) 0–5 cm depth of soil occupied by lichens on the surface (moderately degraded), and iii) 0–5 cm in bared subsoil patches (completely degraded). The gross N mineralization rate decreased 6 times in the bared subsoil patches compared to the 5–10 cm in soil covered by Kobresia pygmaea. The gross nitrification rate of 0–5 cm depth of soil under Kobresia pygmaea community was 1.67 times higher than in the bare subsoil patches. The net N mineralization and nitrification rates were negative, pointing to strong N limitations, especially in bare subsoil patches. Among the three patch types, the bared subsoil had the slowest N transformation rates for all studied processes. As alpine grasslands degrade, net N mineralization and nitrification processes significantly decline, intensifying N limitations for plants. Furthermore, the appearance of bared subsoil patches further accelerates root mat destruction, adding complexity to ecosystem degradation and increasing N loss from the ecosystem.