Anthropogenic activities have significantly altered global biogeochemical nitrogen (N) cycling leading to major environmental problems such as freshwater eutrophication, biodiversity loss and enhanced greenhouse gas emissions. The soils in the riparian interface between terrestrial and aquatic ecosystems may prevent excess N from entering freshwaters (e.g. via plant uptake, microbial transformations and denitrification). Although these processes are well documented in intensively managed agroecosystems, our understanding of riparian N removal in semi-natural systems remains poor. Our aim was to assess the spatial zoning of soil microbial communities (PLFA), N cycling gene abundance (archaeal and bacterial amoA, nifH, nirK, nirS, nosZ), N processing rates and plant N uptake across an extensively sheep grazed riparian area. As expected, soil properties differed greatly across the riparian transect, with significant decreases in organic matter, NH4+, carbon (C) and N content closest to the river (<10 m). In addition, different microbial community structures were found along the transect. The abundance of N fixation (nifH) increased with distance from the river (>10 m), while ammonia oxidising archaea (AOA) increased in abundance towards the river. N2O emissions rates were limited by C and to a lesser extent by N with greater emissions close to the river. Plant uptake of urea-derived 15N was high (ca. 55–70% of that added to the soil) but 30–65% of the N was potentially lost by denitrification or leaching. Percentage recovered also suggests that the spatial patterning of plant and microbial N removal processes are different across the riparian zone. Our study provides novel insights into the underlying mechanisms controlling the spatial variability of N cycling in semi-natural riparian ecosystems.