We evaluated the impacts of natural wetlands and various land uses on stream nitrogen concentration in two grassland-dominated catchments in eastern Hokkaido, Japan. Analyzing land use types in drainage basins, measuring denitrification potential of its soil, and water sampling in all seasons of 2003 were performed. Results showed a highly significant positive correlation between the concentration of stream NO3-N and the proportion of upland area in drainage basins in both catchments. The regression slope, which we assumed to reflect the impact on water quality, was 24% lower for the Akkeshi catchment (0.012 +/- 0.001) than for the Shibetsu catchment (0.016 +/- 0.001). In the Akkeshi catchment, there was a significant negative correlation between the proportion of wetlands in the drainage basins and stream NO3-N concentration. Stream dissolved organic nitrogen (DON) and carbon (DOC) concentrations were significantly higher in the Akkeshi catchment. Upland and urban land uses were strongly linked to increases in in-stream N concentrations in both catchments, whereas wetlands and forests tended to mitigate water quality degradation. The denitrification potential of the soils was highest in wetlands, medium in riparian forests, and lowest in grasslands; and was significant in wetlands and riparian forests in the Akkeshi catchment. The solubility of soil organic carbon (SOC) and soil moisture tended to determine the denitrification potential. These results indicate that the water environment within the catchments, which influences denitrification potential and soil organic matter content, could have caused the difference in stream water quality between the two catchments.