In nature, denitrification can take place in both terrestrial and marine ecosystems. Typically, denitrification occurs in anoxic environments, where the concentration of dissolved and freely available oxygen is depleted. In these areas, nitrate (NO) or nitrite () can be used as a substitute terminal electron acceptor instead of oxygen (O), a more energetically favourable electron acceptor. Terminal electron acceptor is a compound that gets reduced in the reaction by receiving electrons. Examples of anoxic environments can include soils, groundwater, wetlands, oil reservoirs, poorly ventilated corners of the ocean and seafloor sediments.
Furthermore, denitrification can occur in oxic environments as well. High activity of denitrifiers can be observed in the intertidal zones, where the tidal cycles cause fluctuations of oxygen concentration in sandy coastal sediments. For example, the bacterial species Paracoccus denitrificans engages in denitrification under both oxic and anoxic conditions simultaneously. Upon oxygen exposure, the bacteria is able to utilize nitrous oxide reductase, an enzyme that catalyzes the last step of denitrification. Aerobic denitrifiers are mainly Gram-negative bacteria in the phylum Proteobacteria. Enzymes NapAB, NirS, NirK and NosZ are located in the periplasm, a wide space bordered by the cytoplasmic and the outer membrane in Gram-negative bacteria.
Denitrification can lead to a condition called isotopic fractionation in the soil environment. The two stable isotopes of nitrogen, N and N are both found in the sediment profiles. The lighter isotope of nitrogen, N, is preferred during denitrification, leaving the heavier nitrogen isotope, N, in the residual matter. This selectivity leads to the enrichment of N in the biomass compared to N. Moreover, the relative abundance of N can be analyzed to distinguish denitrification apart from other processes in nature.