Improved nitrogen utilization of dairy production systems should improve not only the economic output of the systems but also the environmental metrics. One strategy to improve efficiency is through breeding programs. Improving a trait through breeding is conditional on the presence of exploitable genetic variability. Using a database of 1,291 deeply phenotyped grazing dairy cows, the genetic variability for 2 definitions of nitrogen utilization was studied: nitrogen use efficiency (i.e., nitrogen output in milk and meat divided by nitrogen available) and nitrogen balance (i.e., nitrogen available less nitrogen output in milk and meat). Variance components for both variables were estimated using animal repeatability linear mixed models. Genetic variability was detected for both nitrogen utilization metrics, even though their heritability estimates were low (<0.10). Validation of genetic evaluations revealed that animals divergent for nitrogen use efficiency or nitrogen balance indeed differed phenotypically, further demonstrating that breeding for improved nitrogen efficiency should result in a shift in the population mean toward better efficiency. Nitrogen use efficiency and nitrogen balance were not genetically correlated with each other (<|0.28|), and neither metric was correlated with milk urea nitrogen (<|0.12|). Nitrogen balance was unfavorably correlated to milk yield, showing the importance of including the nitrogen utilization metrics in a breeding index to improve nitrogen utilization without negatively impacting milk yield. In conclusion, improvement of nitrogen utilization through breeding is possible, even if more nitrogen utilization phenotypic data need to be collected to improve the selection accuracy considering the low heritability estimates.