Changes in frequency and intensity of drought events are anticipated in many areas of the world. In pasture, drought effects on soil nitrogen (N) cycling are spatially and temporally heterogeneous due to N redistribution by grazers. We studied soil N cycling responses to simulated summer drought and N deposition by grazers in a 3-year field experiment replicated in two grasslands differing in climate and management. Cattle urine and NH4NO3 application increased soil NH4(+) and NO3(-) concentrations, and more so under drought due to reduced plant uptake and reduced nitrification and denitrification. Drought effects were, however, reflected to a minor extent only in potential nitrification, denitrifying enzyme activity (DEA), and the abundance of functional genes characteristic of nitrifying (bacterial and archaeal amoA) and denitrifying (narG, nirS, nirK, nosZ) micro-organisms. N2O emissions, however, were much reduced under drought, suggesting that this effect was driven by environmental limitations rather than by changes in the activity potential or the size of the respective microbial communities. Cattle urine stimulated nitrification and, to a lesser extent, also DEA, but more so in the absence of drought. In contrast, NH4NO3 reduced the activity of nitrifiers and denitrifiers due to top-soil acidification. In summary, our data demonstrate that complex interactions between drought, mineral N availability, soil acidification, and plant nutrient uptake control soil N cycling and associated N2O emissions. These interactive effects differed between processes of the soil N cycle, suggesting that the spatial heterogeneity in pastures needs to be taken into account when predicting changes in N cycling and associated N2O emissions in a changing climate.