Approximately 40% of the total global rate of nitrogen fixation is the result of human activities, and most of this anthropogenic nitrogen is used to fertilize agricultural fields. Approximately 23% of the applied agricultural nitrogen is delivered to the coastal zone, often reducing water quality and driving eutrophication. Nitrogen cycling in coastal sediments can mitigate eutrophication by removing bioavailable nitrogen. However, some of these processes generate nitrous oxide, a potent greenhouse gas, as a by‐product. Here we report the discovery of a nitrous oxide production hot spot in shallow barrier island sands. Nitrous oxide concentrations, production and consumption rates, vertical diffusion fluxes, and flux to the atmosphere were measured across triplicate depth profiles. Using a mass balance approach, rates of net nitrous oxide production were estimated to be 40 µmol m−2 d−1. This production was driven by a hot spot of nitrate consumption that removed bioavailable nitrogen from the coastal environment at a rate of 10 mmol m−2 d−1, a rate that is comparable with the highest rates of denitrification reported for coastal sediments.