(1) Background: Nitrogen (N) fertilization on drained tropical peatland will likely stimulate peat decomposition and mineralization, enhancing N
2O emission from the peat soil. (2) Methods: A field experiment was conducted to quantify the N
2O emissions from soil in an oil palm plantation (
Elaeis guineensis Jacq.) located in a tropical peatland in Sarawak, Malaysia, under different rates of N fertilizers. The study was conducted from January 2010 to December 2013 and resumed from January 2016 to December 2017. Nitrous oxide (N
2O) flux was measured every month using a closed chamber method for four different N rates; control—without N (T1), 31.1 kg N ha
−1 yr
−1 (T2), 62.2 kg N ha
−1 yr
−1 (T3), and 124.3 kg N ha
−1 yr
−1 (T4); (3) Results: Application of the N fertilizer significantly increased annual cumulative N
2O emissions for T4 only in the years 2010 (
p = 0.017), 2011 (
p = 0.012), 2012 (
p = 0.007), and 2016 (
p = 0.048). The highest average annual cumulative N
2O emissions were recorded for T4 (41.5 ± 28.7 kg N ha
−1 yr
−1), followed by T3 (35.1 ± 25.7 kg N ha
−1 yr
−1), T1 (25.2 ± 17.8 kg N ha
−1 yr
−1), and T2 (25.1 ± 15.4 kg N ha
−1 yr
−1), indicating that the N rates of 62.2 kg N ha
−1 yr
−1 and 124.3 kg N ha
−1 yr
−1 increased the average annual cumulative N
2O emissions by 39% and 65%, respectively, as compared to the control. The N fertilization had no significant effect on annual oil palm yield (
p = 0.994). Alternating between low (deeper than −60 cm) and high groundwater level (GWL) (shallower than −60 cm) enhanced nitrification during low GWL, further supplying NO
3− for denitrification in the high GWL, and contributing to higher N
2O emissions in high GWL. The emissions of N
2O ranged from 17 µg N m
−2 hr
−1 to 2447 µg N m
−2 hr
−1 and decreased when the water-filled pore space (WFPS) was between 70% and 96%, suggesting the occurrence of complete denitrification. A positive correlation between N
2O emissions and NO
3− at 70–96% WFPS indicated that denitrification increased with increased NO
3− availability. Based on their standardized regression coefficients, the effect of GWL on N
2O emissions increased with increased N rate (
p < 0.001). Furthermore, it was found that annual oil palm yields negatively correlated with annual N
2O emission and NO
3− for all treatments. Both nitrification and denitrification increased with increased N availability, making both processes important sources of N
2O in oil palm cultivation on tropical peatland.; and (4) Conclusions: To improve understanding of N
2O mitigation strategies, further studies should consider plant N uptake on N
2O emissions, at least until the completion of the planting.
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