Arsenic (As), lead (Pb), copper (Cu) and zinc (Zn) can be found in large concentrations in mine spills of central and northern Mexico. Interest in these heavy metals has increased recently as they contaminate drinking water and aquifers in large parts of the world and severely affect human health, but little is known about how they affect biological functioning of soil. Soils were sampled in seven locations along a gradient of heavy metal contamination with distance from a mine in San Luis Potosí (Mexico), active since about 1800 AD. C mineralization and N2O production were monitored in an aerobic incubation experiment. Concentrations of As in the top 0–10 cm soil layer ranged from 8 to 22,992 mg kg−1, from 31 to 1845 mg kg−1 for Pb, from 27 to 1620 mg kg−1 for Cu and from 81 to 4218 mg kg−1 for Zn. There was a significant negative correlation between production rates of CO2 and concentrations of As, Pb, Cu and Zn, and there was a significant positive correlation with pH, water holding capacity (WHC), total N and soil organic C. There was a significant negative correlation (P<0.05) between production rate of nitrous oxide (N2O) attributed to nitrification by the inhibition method in soil incubated at 50% WHC and total concentrations of Pb and Zn, and there was a significant positive correlation (P<0.05) with pH and total N content. There was a significant negative correlation (P<0.05) between the production rate of N2O attributed to denitrification by the inhibition method in soil incubated at 100% WHC and total concentrations of Pb, Cu and Zn, and a significant positive correlation (P<0.01) with pH; there was a significant positive correlation (P<0.05) between the production of N2O attributed to other processes by the inhibition method and WHC, inorganic C and clay content. A negative value for production rate of N2O attributed to nitrifier denitrification by the inhibition method was obtained at 100% WHC. The large concentrations of heavy metals in soil inhibited microbial activity and the production rate of N2O attributed to nitrification by the inhibition method when soil was incubated at 50% WHC and denitrification when soil was incubated at 100% WHC. The inhibitor/suppression technique used appeared to be flawed, as negative values for nitrifier denitrification were obtained and as the production rate of N2O through denitrification increased when soil was incubated with C2H2.