<p>At present, research on the role of microorganisms and microbial residue nitrogen (MRN) in nitrogen retention and transformation in relation to the nitrogen cycle in wetland soils is relatively limited. The objective of this study is to investigate the roles of microorganisms and MRN in nitrogen retention and cycling transformation in wetland soils, as well as to examine the relationship between MRN and functional genes associated with nitrogen cycling. The Caohai wetland was selected as the research area, and the soils of bare flat (BF), <i>Phragmites australis</i>, and <i>Typha angustifolia</i> were collected. The concentrations of inorganic nitrogen, total nitrogen, microbial biomass nitrogen (MBN), and MRN in the soils of different vegetation habitats were quantified. Differences in microbial community structures and functional genes abundance related to the nitrogen cycle were analyzed. Compared with the BF, soil ammonium and nitrate in the vegetated areas were found to be lower, while levels of MRN and MBN increased. The gene abundance of nitrification and ammonification were elevated in vegetated soils , whereas those linked to nitrate transformation pathways were decreased. MRN exhibited a significant negative correlation with <i>nosZ</i> and <i>nirB</i>. Fungal residual nitrogen showed a significant positive correlation with <i>amoA/C</i>. Bacterial residue nitrogen was significantly negatively correlated with <i>ureB</i> and <i>nxrB</i>. Microorganisms and MRN help reduce soil nitrogen loss and play important roles in maintaining the nitrogen balance in the Caohai wetland. The research findings have important guiding value for nitrogen management in wetlands and provide a theoretical basis for the restoration and protection of these ecosystems.</p>