Field-applied manure is a key source of N2O emissions from agriculture, but effects of manure distribution on emissions are poorly understood. With a 28-day incubation experiment we investigated how the distribution of cattle slurry (rate: 100 kg total N ha− 1) influenced mineral N dynamics and N2O emissions, and sources, when incubated at one of three matric potentials ( \(\:\psi_m\) , -30, -50 or -100 hPa, that corresponded to 67, 59 and 51% water-filled pore space, respectively. At each \(\:\psi_m\) , manure was either mixed homogeneously with soil or placed as a layer between two soil phases, or no manure was added. To investigate sources of N2O, soil NO3− was enriched with 15N. Mineral N dynamics, CO2 and N2O fluxes, and 15N enrichment of soil NO3− and N2O, were monitored. The effects of distribution were dramatic, the mixed slurry showing 4–13 times higher N2O emissions compared to the discrete distribution, equivalent to 0.47–4.8% and 0.09–0.36% of the N applied, respectively. At -30 hPa the high N2O emissions and NO3− removal occurred mainly during the first week with mixed distribution, and denitrification accounted for up to 81% of N2O emissions. In contrast, the N2O emissions with discrete distribution declined by day 3 and much less NO3− was consumed. Nitrification was apparently the main source of N2O in this treatment as well as all treatments at -50 and − 100 hPa. Nitrate availability probably explained the higher N2O emissions with mixed compared to discrete manure distribution. The effects of distribution have important implications for models which assume a uniform distribution of degradable C and NO3− in the soil.