Thin, vertically structured topsoil communities that become ecologically important in arid regions (biological soil crusts or BSCs) are responsible for much of the nitrogen inputs into pristine arid lands. We studied N2 fixation and ammonium oxidation (AO) at subcentimetre resolution within BSCs from the Colorado Plateau. Pools of dissolved porewater nitrate/ nitrite, ammonium and organic nitrogen in wetted BSCs were high in comparison with those typical of aridosoils. They remained stable during incubations, indicating that input and output processes were of similar magnitude. Areal N2 fixation rates (6.5-48 ??mol C2H2 m-2 h -1) were high, the vertical distribution of N2 fixation peaking close to the surface if populations of heterocystous cyanobacteria were present, but in the subsurface if they were absent. Areal AO rates (19-46 ??mol N m-2 h-1) were commensurate with N2 fixation inputs. When considering oxygen availability, AO activity invariably peaked 2-3 mm deep and was limited by oxygen (not ammonium) supply. Most probable number (MPN)-enumerated ammonia-oxidizing bacteria (6.7-7.9 ?? 103 cells g-1 on average) clearly peaked at 2-3 mm depth. Thus, AO (hence nitrification) is a spatially restricted but important process in the nitrogen cycling of BSC, turning much of the biologically fixed nitrogen into oxidized forms, the fate of which remains to be determined.