In extreme environments, retention of nutrients within stream ecosystems contributes to the persistence of aquatic biota and continuity of ecosystem function. In the McMurdo Dry Valleys, Antarctica, many glacial meltwater streams flow for only 5–12 weeks a year and yet support extensive benthic microbial communities. We investigated NO₃⁻ uptake and denitrification in Green Creek by analyzing small‐scale microbial mat dynamics in mesocosms and reach‐scale nutrient cycling in two whole‐stream NO₃⁻ enrichment experiments. Nitrate uptake results indicated that microbial mats were nitrogen (N)‐limited, with NO₃⁻ uptake rates as high as 16 nmol N cm⁻² h⁻¹. Denitrification potentials associated with microbial mats were also as high as 16 nmol N cm⁻² h⁻¹. During two whole‐stream NO₃⁻−enrichment experiments, a simultaneous pulse of NO₂⁻ was observed in the stream water. The one‐dimensional solute transport model with inflow and storage was modified to simulate two storage zones: one to account for short time scale hydrologic exchange of stream water into and out of the benthic microbial mat, the other to account for longer time scale hydrologic exchange with the hyporheic zone. Simulations indicate that injected NO₃⁻ was removed both in the microbial mat and in the hyporheic zone and that as much as 20% of the NO₃⁻ that entered the microbial mat and hyporheic zone was transformed to NO₂⁻ by dissimilatory reduction. Because of the rapid hydrologic exchange in microbial mats, it is likely that denitrification is limited either by biotic assimilation, reductase limitation, or transport limitation (reduced NO₂⁻ is transported away from reducing microbes).