In order to determine if the δ¹⁵N and δ¹⁸O values of N₂O produced during co-oxidation of NH₄⁺ by methanotrophic (methane oxidizing) bacteria can be isotopically distinguished from N₂O produced either by autotrophic nitrifying or denitrifying bacteria, we conducted laboratory incubation experiments with pure cultures of methanotrophic bacteria that were provided NH₄Cl as an oxidation substrate. The N₂O produced during NH₄⁺ oxidation by methanotrophic bacteria showed nitrogen isotope fractionation between NH₄⁺ and N₂O (ε_N2O–NH4⁺) of − 48 and − 55‰ for Methylomonas methanica and Methylosinus trichosporium, OB3b respectively. These large fractionations are similar to those previously measured for autotrophic nitrifying bacteria and consistent with N₂O formation by multiple rate limiting steps that include NH₄⁺oxidation by the methane monooxygenase enzyme and reduction of NO₂⁻ to N₂O. Consequently, N₂O formed by NH₄⁺ oxidation via methanotrophic or autotrophic nitrifying bacteria might generally be characterized by lower δ¹⁵N_N2O values than that formed by denitrificaiton, although this also depends on the variability of δ¹⁵N of available nitrogen sources (e.g., NH₄⁺, NO₃⁻, NO₂⁻). Additional incubations with M. trichosporium OB3b at high and low CH₄ conditions in waters of different δ¹⁸O values revealed that 19–27% of the oxygen in N₂O was derived from O₂ with the remainder from water. The biochemical mechanisms that could explain this amount of O₂ incorporation are discussed. The δ¹⁸O of N₂O formed under high CH₄ conditions was ~ + 15‰ more positive than that formed under lower CH₄ conditions. This enrichment resulted in part from the incorporation of O₂ into N₂O that was enriched in ¹⁸O due to an isotope fractionation effect of − 16.1 ± 2.0‰ and − 17.5 ± 5.4‰ associated with O₂ consumption during the high and low methane concentration incubations, respectively. Therefore, N₂O formed by NH₄⁺ oxidation via methanotrophic or autotrophic nitrifying bacteria can have very positive δ¹⁸O_N2O values if the O₂incorporated is previously enriched in ¹⁸O from high rates of respiration. Nitrous oxide was collected from various depths in soils overlying a coal-bed methane seep where methanotrophic bacteria are naturally enriched. In one sampling when soil methane concentrations were very high, the δ¹⁸O_VSMOW values of the N₂O were highly enriched (+ 50‰), consistent with our laboratory experiments. Thus, soils overlying methane seeps could provide an ¹⁸O-enriched source of atmospheric N₂O.