Nitrogen (N) retention and transformation in the Szczecin Lagoon, southern Baltic Sea, were studied by means of budget calculations and stable isotope data of dissolved and particulate matter. Two stations, one located at the main outlet of the lagoon (Swina Strait) and the other 100 km to the south, on the Oder River (Widuchowa), were sampled biweekly over the years 2000-2002. The Oder River is one of the five largest rivers draining into the Baltic Sea and the largest one discharging its waters into the western Baltic. According to our data, the Oder River carried approximately 60 kt y(-1) total N, of which 7 kt y(-1) (<12 %) are particulate organic nitrogen and 46 kt y(-1) (77 %) dissolved inorganic nitrogen. Seasonal patterns of particulate nitrogen and nitrate concentrations were similar at Widuchowa and Swina Strait station, but nitrate concentrations in the Swina Strait were much lower, pointing not only to the dilution effect but also to considerable nutrient removal capacity (especially of nitrate) in the lagoon. The loss of nitrate suggests that denitrification is the major N-removal process, whereas primary production was only a minor contributor, due to the very low particle load. Combining budget calculations with stable isotope measurements reveal unique information about nitrogen turnover processes in the lagoon.