N2O is a potent greenhouse gas and stratospheric reactant that has been steadily on the rise since the beginning of industrialization. It is an obligatory inorganic metabolite of denitrifying bacteria, and some production of N2O is also found in nitrifying and methanotrophic bacteria. We focus this review on the respiratory aspect of N2O transformation catalysed by the multicopper enzyme nitrous oxide reductase (N2OR) that provides the bacterial cell with an electron sink for anaerobic growth. Two types of Cu centres discovered in N2OR were both novel structures among the Cu proteins: the mixed-valent dinuclear Cu(A) species at the electron entry site of the enzyme, and the tetranuclear Cu(Z) centre as the first catalytically active Cu-sulfur complex known. Several accessory proteins function as Cu chaperone and ABC transporter systems for the biogenesis of the catalytic centre. We describe here the paradigm of Z-type N2OR, whose characteristics have been studied in most detail in the genera Pseudomonas and Paracoccus. Sequenced bacterial genomes now provide an invaluable additional source of information. New strains harbouring nos genes and capability of N2O utilization are being uncovered. This reveals previously unknown relationships and allows pattern recognition and predictions. The core nos genes, nosZDFYL, share a common phylogeny. Most principal taxonomic lineages follow the same biochemical and genetic pattern and share the Z-type enzyme. A modified N2OR is found in Wolinella succinogenes, and circumstantial evidence also indicates for certain Archaea another type of N2OR. The current picture supports the view of evolution of N2O respiration prior to the separation of the domains Bacteria and Archaea. Lateral nos gene transfer from an epsilon-proteobacterium as donor is suggested for Magnetospirillum magnetotacticum and Dechloromonas aromatica. In a few cases, nos gene clusters are plasmid borne. Inorganic N2O metabolism is associated with a diversity of physiological traits and biochemically challenging metabolic modes or habitats, including halorespiration, diazotrophy, symbiosis, pathogenicity, psychrophily, thermophily, extreme halophily and the marine habitat down to the greatest depth. Components for N2O respiration cover topologically the periplasm and the inner and outer membranes. The Sec and Tat translocons share the task of exporting Nos components to their functional sites. Electron donation to N2OR follows pathways with modifications depending on the host organism. A short chronology of the field is also presented.