When faced with a shortage of oxygen, many bacterial species use nitrate to support respiration via the process of denitrification. This takes place extensively in nitrogen-rich soils and generates the gaseous products nitric oxide (NO), nitrous oxide (N2O) and dinitrogen (N2). The denitrifying bacteria protect themselves from the endogenous cytotoxic NO produced by converting it to N2O, which can be released into the atmosphere. However, N2O is a potent greenhouse gas and hence the activity of the enzyme that breaks down N2O has a crucial role in restricting its atmospheric levels. Here, we review the current understanding of the process by which N2O is produced and destroyed and discuss the potential for feeding this into new approaches for combating N2O release.