Laboratory incubations and a field experiment were carried out to determine the factors controlling N mineralization and nitrification, and to estimate the N losses (leaching and volatilization) in a sewage-sludge-amended Oxisol. Aerobically digested sludge was applied at a rate equivalent to 625 kg N/ha. The incubations were conducted as a factorial experiment of temperature (20 degreesC, 30 degreesC, and 40 degreesC) x soil water (-30 kPa and -1500 kPa) x sludge type [fresh (FS) water content 6230 g/kg; dry (DS) water content 50 g/kg]. The amount of nitrifiers was determined at the beginning and at the end of the experiment. The incubation lasted 24 weeks. The field study was conducted using bare microplots (4 m(2)) and consisted of a factorial experiment of sludge type (FS and DS) x sludge placement (subsurface, I+; surface, I-). Ammonia volatilization and the profile (0-0.90 m) of mineral N concentration were measured during 6 and 29 weeks after sludge application, respectively. After 24 weeks of incubation at 40 degreesC and -30 kPa, net N mineralization represented 52% (FS) and 71% (DS) of the applied N. The difference between sludges was due to an initial period of N immobilization in FS. Nitrification was more sensitive than N mineralization to changes in water potential and it was fully inhibited at -1500 kPa. The introduction of a large amount of nitrifiers with FS did not modify the rate of nitrification, which was principally limited by soil acidity (pH 4.9). Although N mineralization was greatest at 30 degreesC, nitrification increased continuously with temperature. Nitrogen mineralization from DS was well described by the double-exponential equation. For FS, the equation was modified to take into account an immobilization-remineralization period. Sludge placement significantly affected the soil NO3-/NH4+ ratio in the field: 16 for I+ and 1.5 for I-, after 11 weeks. In the I- treatment, nitrification of the released NH4+ was limited by soil moisture because of the dry soil mulch formed a few hours after rain. At the end of the field experiment, the estimated losses of N by leaching were 432 kg N/ha for I+ and 356 kg N/ha for I-. Volatilization was not detectable in the I+ microplots and it represented only 0.5% of the applied N in the I- microplots. The results showed that placement of sludge may be a valuable tool to decrease NO3- leaching by placing the sludge under unfavourable conditions for nitrification.