AbstractThe draining and fertilization of peatlands for agriculture is globally an important source of the greenhouse gas nitrous oxide (N₂O). Hitherto, the contribution of major sources to the N₂O emission—that is, fertilization and nitrogen (N) release from peat decomposition—has not yet been deciphered. This hampers the development of smart mitigation strategies, considering that rewetting to halt peat decomposition and reducing N fertilization are promising N₂O emission‐reduction strategies. Here, we used machine learning techniques and global N₂O observational data to generalize the distribution of N₂O emissions from agriculturally managed peatlands, to distinguish the sources of N₂O emissions, and to compare mitigation options. N₂O emissions from agriculturally managed croplands were 401.0 (344.5–470.9) kt N year⁻¹, with 121.6 (88.6–163.3) kt N year⁻¹ contributed by fertilizer N. On grasslands, 64.0 (54.6–74.7) kt N₂O‐N year⁻¹ were emitted, with 4.6 (3.7–5.7) kt N₂O‐N year⁻¹ stemming from fertilizer N. The fertilizer‐induced N₂O emission factor ranged from 1.5% to 3.2%. Reducing the current fertilizer input by 20% could achieve a 10% N₂O emission reduction for croplands but only 3% for grasslands. Rewetting 1.9 Mha cropland and 0.26 Mha grassland would achieve the same N₂O emission reductions. Our results suggest that N₂O mitigation strategies for managed peatlands should be considered separately across land‐use types and climatic zones. For croplands, particularly in the tropics, relevant N₂O mitigation potentials are achievable through both fertilizer N reduction and peatland rewetting. For grasslands, management schemes to halt peat degradation (e.g. rewetting) should be considered preferentially for mitigating N₂O and contributing to meeting climate goals.