Organic carbon supply is linked to nitrogen transformation in ecosystems. However, the role of organic carbon quality in nitrogen processing is not as well understood. We determined how the quality of particulate organic carbon (POC) influenced nitrogen transformation in stream sediments by burying identical quantities of varying quality POC (northern red oak (Quercus rubra) leaves, red maple (Acer rubrum) leaves, red maple wood) in stream mesocosms and measuring the effects on nitrogen retention and denitrification compared to a control of combusted sand. We also determined how POC quality affected the quantity and quality of dissolved organic carbon (DOC) and dissolved oxygen concentration in groundwater. Nitrate and total dissolved nitrogen (TDN) retention were assessed by comparing solute concentrations and fluxes along groundwater flow paths in the mesocosms. Denitrification was measured by in situ changes in N₂ concentrations (using MIMS) and by acetylene block incubations. POC quality was measured by C:N and lignin:N ratios and DOC quality was assessed by fluorescence excitation emission matrix spectroscopy. POC quality had strong effects on nitrogen processing. Leaf treatments had much higher nitrate retention, TDN retention and denitrification rates than the wood and control treatments and red maple leaf burial resulted in higher nitrate and TDN retention rates than burial of red oak leaves. Leaf, but not wood, burial drove pore water to severe hypoxia and leaf treatments had higher DOC production and different DOC chemical composition than the wood and control treatments. We think that POC quality affected nitrogen processing in the sediments by influencing the quantity and quality of DOC and redox conditions. Our results suggest that the type of organic carbon inputs can affect the rates of nitrogen transformation in stream ecosystems.