The sediment–water interfaces (SWI) of streams serve as important biogeochemical hotspots in watersheds and contribute to whole-catchment reactive nitrogen budgets and water-quality conditions. Recently, the SWI has been identified as an important source of nitrous oxide (N₂O) produced in streams, with SWI residence time among the principal controls on its production. Here, we conducted a series of controlled manipulations of SWI exchange in an urban stream that has high dissolved N₂O concentrations and where we concurrently evaluated less-mobile porosity dynamics. Our experiments took place within isolated portions of two sediment types: a coarse sandy stream bed resulting from excess road-sand application in the watershed, and a coarse sand mixed with clay and organic particles. In these manipulation experiments we systematically varied SWI vertical-flux rates and residence times to evaluate their effect on the fate of nitrate and production rates of N₂O. Our experiments demonstrate that the fate and transport of nitrate and N₂O production are influenced by hydrologic flux rates through SWI sediments and associated residence times. Specifically, we show that manipulations of hydrologic flux systematically shifted the depth of the bulk oxic–anoxic interface in the sediments, and that nitrate removal increased with residence time. Our results also support the emerging hypothesis of a ‘Goldilocks’ timescale for the production of nitrous oxide, when transport and reaction timescales favor incomplete denitrification. Areal N₂O production rates were up to threefold higher during an intermediate residence-time experiment, compared to shorter or longer residence times. In our companion study we documented that the studied sediments were dominated by a long-residence-time less-mobile porosity domain, which could explain why we observed N₂O production even in bulk-oxic sediments. Overall, we have experimentally demonstrated that changes to SWI hydrologic residence times and SWI substrate associated with urbanization can change the biogeochemical function of the river corridor.