Effluents from leather processing, a major industry that produces up to 64 kt waste water year−1 in the town of León (Guanajuato, Mexico), are normally discharged to the river Turbio without treatment and used downstream to irrigate agricultural land. Tannery waste water contains valuable nutrients, but also contaminants, such as salts and chromium (Cr) that might affect soil processes and crop production. We investigated how almost 25 years of irrigation of agricultural land with water from the river Turbio affected dynamics of carbon (C) and nitrogen (N) and production of nitrous oxide (N2O) under different water regimes and fertilizer application rates. Soil sampled from three adjacent fields irrigated with water from the river Turbio (soil A river irrigated) and at a distance of 10 km from the irrigation canals irrigated with non-contaminated well water (soil B well irrigated), was characterized while dynamics of C and N and production of N2O were measured in an aerobic incubation experiment. Production of CO2 was 1.33 times larger in soil A than in soil B and addition of 200 mg kg−1 ammonium (NH4+) increased its production 1.16-fold in soil B, but not in soil A. Concentrations of nitrite (NO2−) increased with increasing water content and application of 200 mg NH4+-N kg−1 soil. The soil, the addition of NH4+-N and the water content of the soil all had a significant effect on the N2O emission. Production of N2O was >40 times larger in soil incubated at 100% WHC compared to soil incubated at 40% WHC after 1 day. Emission of N2O was 6.0 times larger from soil A than from soil B. It increased 25.7 times in soil B amended with 200 mg NH4+-N kg−1 soil compared to the unamended soil, but only 1.8 times in soil A after 1 day. It was found that respiration and nitrification was not affected by irrigation with water from the river Turbio, but production of N2O was larger in soil irrigated with water from the river Turbio than in soil irrigated with well water.