Formation of thermokarst features, ground subsidence caused by thaw of ice-rich permafrost, can result in increased export of inorganic nitrogen (N) from arctic tundra to downstream ecosystems. We compared physical characteristics, N pools, and rates of N transformations in soils collected from thermo-erosion gullies, intact water tracks (the typical precursor landform to thermo-erosion gullies), and undisturbed tundra to test potential mechanisms contributing to export of inorganic N. Subsidence exposes mineral soils, which tend to contain higher abundance of inorganic ions relative to surface soils, and may bring inorganic N into contact with flowing water. Alternatively, physical mixing may increase aeration and drainage of soils, which could promote N mineralization and nitrification while suppressing denitrification. Finally, some soil types are more prone to formation of thermokarst, and if these soils are relatively N-rich, thermokarst features may export more N than surrounding tundra. Inorganic N pools in thermo-erosion gullies were similar to the mean for all tundra types in this region, as well as to water tracks when integrated across two sampled depths. Thus, soils prone to thermo-erosion are not intrinsically N-rich, and increased N availability in thermokarst features is apparent only at sub-regional spatial scales. However, vertical profiles of N pools and transformation rates were homogenized within thermo-erosion gullies compared to adjacent intact tundra, indicating that physical mixing brings inorganic N to the surface, where it may be subject to hydrologic export. Increased inorganic N availability caused by formation of thermo-erosion gullies may have acute, localized consequences for aquatic ecosystems downstream of positions within drainage networks that are susceptible to thermo-erosion.