A seasonal study of sediment–water nutrient fluxes and denitrification rates was conducted at two sites in the Gulf of Riga, Baltic Sea, located at 44 and 45 m depth. The sediment was muddy with a total carbon content of 4.83–5.16 mmol g−1 dry weight and inhabited by Marenzelleria spp., 10–130 ind m−2, and Crustacea, 70–120 ind m−2. The near-bottom water temperature and oxygen concentration varied from 3 to 9 °C and from 122 to 394 µM, respectively, during the study. The oxygen and nutrient fluxes as well as denitrification that was sustained by nitrates from water column showed clear dependency from seasonally fluctuating near-bottom water oxygen concentration levels. At the same time, clear temperature impact could be detected only in case of oxygen consumption, denitrification rates and fluxes of dissolved organic nitrogen. The seasonally increasing near-bottom water temperature seems to be the main factor that controlled overall increase of denitrification rates. At the same time, shift in relative importance from denitrification of nitrate produced by nitrification to denitrification of nitrate from water column was observed as a result of decrease in oxygen level. The release of mineral forms of nutrients from sediment were low during spring when input of settling organic material was expected and intensified under low oxygen concentrations suggesting that re-mineralized nutrients could be temporarily retained in sediments under favorable conditions.