Nitrous oxide (N 2O) emissions are highly variable in time, with high peak emissions lasting a few days to several weeks and low background emissions. This temporal variability is poorly understood which hampers the simulation of daily N 2O emissions. In structured soils, like clay and peat, aggregates hamper the diffusion of oxygen, which leads to anaerobic microsites in the soil, favourable for denitrification. Diffusion of N 2O out of the aggregates is also hampered, which leads to delayed emissions and increased reduction of N 2O to N 2. In this model simulation study we investigate the effect of aggregates in soils on the N 2O emissions. We present a parameterization to simulate the effects of aggregates on N 2O production by denitrification and on N 2O reduction. The parameterization is based on the mobile-immobile model concept. It was implemented in a field-scale hydrological-biogeochemical model combination. We compared the simulated fluxes with observed fluxes from a fertilized and drained peat soil under grass. The results of this study show that aggregates strongly affect the simulated N 2O emissions: peak emissions are lower, whereas the background emissions are slightly higher. Including the effect of aggregates caused a 40% decrease in the simulated annual emissions relative to the simulations without accounting for the effects of aggregates. The new parameterization significantly improved the model performance regarding simulation of observed daily N 2O fluxes; r 2 and RMSE improved from 0.11 and 198 g N 2O-N haM -1 d -1 to 0.41 and 40 g N 2O-N ha -1 d -1, respectively. Our analyses of the model results show that aggregates have a larger impact on the reduction than on the production of N 2O. Reduction of N 2O is more sensitive to changes in the drivers than production of N 2O and is in that sense the key to understanding N 2O emissions from denitrification. The effects of changing environmental conditions on reduction of N 2O relative to N 2O production strongly depend on the NO 3 content of the soil. More anaerobic conditions have hardly any effect on the ratio of production to reduction if NO 3 is abundant, but will decrease this ratio if NO 3 is limiting. In the first case the emissions will increase, whereas in the second case the emissions will decrease. This study suggests that the current knowledge of the hydrological, biogeochemical and physical processes may be sufficient to understand the observed N 2O fluxes from a fertilized clayey peatland. Further research is needed to test how aggregates affect the N 2O fluxes from other soils or soils with different fertilization regimes. © Author(s) 2011.