Nitrogen is present in the environment in a wide variety of chemical forms including organic nitrogen, ammonium (NH+4), nitrite (NO−2), nitrate (NO−3), nitrous oxide (N2O), nitric oxide (NO) or inorganic nitrogen gas (N2). Organic nitrogen may be in the form of a living organism, humus or in the intermediate products of organic matter decomposition. The processes of the nitrogen cycle transform nitrogen from one form to another. Many of those processes are carried out by microbes, either in their effort to harvest energy or to accumulate nitrogen in a form needed for their growth. For example, the nitrogenous wastes in animal urine are broken down by nitrifying bacteria in the soil to be used anew. The diagram above shows how these processes fit together to form the nitrogen cycle.

Atmospheric nitrogen must be processed, or "fixed", in a usable form to be taken up by plants. Between 5x10_12 and 10x10_12 g per year are fixed by lightning strikes, but most fixation is done by free-living or symbiotic bacteria known as diazotrophs. These bacteria have the nitrogenase enzyme that combines gaseous nitrogen with hydrogen to produce ammonia, which is converted by the bacteria into other organic compounds. Most biological nitrogen fixation occurs by the activity of Mo-nitrogenase, found in a wide variety of bacteria and some Archaea. Mo-nitrogenase is a complex two-component enzyme that has multiple metal-containing prosthetic groups. An example of the free-living bacteria is Azotobacter. Symbiotic nitrogen-fixing bacteria such as Rhizobium usually live in the root nodules of legumes (such as peas, alfalfa, and locust trees). Here they form a mutualistic relationship with the plant, producing ammonia in exchange for carbohydrates. Because of this relationship, legumes will often increase the nitrogen content of nitrogen-poor soils. A few non-legumes can also form such symbioses. Today, about 30% of the total fixed nitrogen is produced industrially using the Haber-Bosch process,which uses high temperatures and pressures to convert nitrogen gas and a hydrogen source (natural gas or petroleum) into ammonia.

Plants take nitrogen from the soil by absorption through their roots as amino acids, nitrate ions, nitrite ions, or ammonium ions. Most nitrogen obtained by terrestrial animals can be traced back to the eating of plants at some stage of the food chain.
Plants can absorb nitrate or ammonium from the soil via their root hairs. If nitrate is absorbed, it is first reduced to nitrite ions and then ammonium ions for incorporation into amino acids, nucleic acids, and chlorophyll. In plants that have a symbiotic relationship with rhizobia, some nitrogen is assimilated in the form of ammonium ions directly from the nodules. It is now known that there is a more complex cycling of amino acids between Rhizobia bacteroids and plants. The plant provides amino acids to the bacteroids so ammonia assimilation is not required and the bacteroids pass amino acids (with the newly fixed nitrogen) back to the plant, thus forming an interdependent relationship. While many animals, fungi, and other heterotrophic organisms obtain nitrogen by ingestion of amino acids, nucleotides, and other small organic molecules, other heterotrophs (including many bacteria) are able to utilize inorganic compounds, such as ammonium as sole N sources. Utilization of various N sources is carefully regulated in all organisms.

The conversion of ammonium to nitrate is performed primarily by soil-living bacteria and other nitrifying bacteria. In the primary stage of nitrification, the oxidation of ammonium (NH+ 4) is performed by bacteria such as the Nitrosomonas species, which converts ammonia to nitrites (NO− 2). Other bacterial species such as Nitrobacter, are responsible for the oxidation of the nitrites (NO− 2) into nitrates (NO− 3). It is important for the ammonia (NH3) to be converted to nitrates or nitrites because ammonia gas is toxic to plants.
Due to their very high solubility and because soils are highly unable to retain anions, nitrates can enter groundwater. Elevated nitrate in groundwater is a concern for drinking water use because nitrate can interfere with blood-oxygen levels in infants and cause methemoglobinemia or blue-baby syndrome. Where groundwater recharges stream flow, nitrate-enriched groundwater can contribute to eutrophication, a process that leads to high algal population and growth, especially blue-green algal populations. While not directly toxic to fish life, like ammonia, nitrate can have indirect effects on fish if it contributes to this eutrophication. Nitrogen has contributed to severe eutrophication problems in some water bodies. Since 2006, the application of nitrogen fertilizer has been increasingly controlled in Britain and the United States. This is occurring along the same lines as control of phosphorus fertilizer, restriction of which is normally considered essential to the recovery of eutrophied waterbodies.

Denitrification is the reduction of nitrates back into nitrogen gas (N2), completing the nitrogen cycle. This process is performed by bacterial species such as Pseudomonas and Clostridium in anaerobic conditions.[5] They use the nitrate as an electron acceptor in the place of oxygen during respiration. These facultatively anaerobic bacteria can also live in aerobic conditions. Denitrification happens in anaerobic conditions e.g. waterlogged soils. The denitrifying bacteria use nitrates in the soil to carry out respiration and consequently produce nitrogen gas, which is inert and unavailable to plants.