Nitrogen (N) is an indispensable mineral nutrient for plant growth and development. Proper nitrogen (N) management, in terms of quality and availability, can increase plant productivity and reduce soil N losses. This study investigated the impact of N availability (form and dose) on the growth, water relations, and nitrogen status and assimilation of smooth cordgrass (Spartina alterniflora) in the presence of 200 mM NaCl. At the optimal N concentration, ammonium (NH4+) application improved biomass production and total leaf area more than nitrate (NO3–) application—the leaves-free NH4+ contents remained very low and did not reach the plant toxicity threshold, while those of NO3− were low, regardless of N form. Compared to NO3−, the use of NH4+ as the sole N source increased water economy. However, at low N concentration, S. alterniflora was sensitive to NH4+ deficiency. Media containing 0.25 or 0.5 mM N as NH4+ inhibited plant growth, causing general chlorosis and cell death, particularly on the lower leaves. In contrast, the response of S. alterniflora to NO3− dose did not significantly differ, indicating their preference for NH4+. The lower glutamine synthetase activity in NH4+-fed plants also suggests NH4+ tolerance. Our findings question the use of NO3−-based fertilizers for species that prefer NH4+ as an N source in salt-affected soil.