While controls on denitrification in stream sediments are well understood, less is known about the factors regulating N₂O production during denitrification. Denitrification potential and N₂O production were measured in six streams in Queensland, Australia. Benthic sediments were incubated with 7 nitrate treatments ranging from 0 to 50 mg N L^-1 and 2 organic carbon treatments, 0 or 30 mg acetate-C L^-1.  Acetylene was added to half the samples to measure potential denitrification and the other half of the samples were used to measure N₂O production. Potential denitrification rates ranged from 0 to 54.2 mg N kg dry soil^-1 d^-1 and generally increased with increasing nitrate concentration until levelling off at concentrations between 5 and 20 mg N L^-1. For most streams, denitrification increased with the addition of organic carbon only when nitrate concentrations were no longer limiting. N₂O production rates were consistently low, with values below 1.3 mg N kg dry soil^-1 d^-1 for most streams, indicating that N₂ was generally the dominant end product of denitrification. However, unlike denitrification potential, N₂O production continued to increase at higher concentrations of nitrate, suggesting that streams receiving very high loads of nitrogen could be significant sources of N₂O.