In EU-28, temporary grasslands constitute more than 10% of the total arable land. Grassland tillage will return up to 400 kg N ha−1 in residues that can lead to a pulse of N2O emissions. Here a novel application of the nitrification inhibitor 3,4-dimethylpyrazole phosphate (DMPP) was evaluated in a 28-d mesocosm experiment, where DMPP spraying prior to tillage was simulated. Above-ground parts of 15N-labelled clover residues were treated with DMPP and either placed at 10 cm depth to simulate ploughing (PL), or mixed with soil at 0–10 cm depth to simulate rotovation (RO). Earthworms (Lumbricus terrestris) were introduced to study their role in residue decomposition and N2O emissions. Fluxes and isotopic composition of N2O were determined with dynamic chambers using laser spectroscopy. A gradual increase in 15N-enrichment of N2O indicated that denitrification was the main source. DMPP reduced cumulative N2O emissions in PL from 241 to 146 mg N m−2; the reduction in RO was smaller, from 103 to 94 mg N m−2, and not significant, possibly due to higher oxygen and soil NO3− availability. After 28 d incubation, on average > 90% of the earthworms were recovered, and in vivo N2O production from L. terrestris accounted for only 1–6% of residue-induced emissions. The guts were removed from worms to quantify DNA and mRNA of denitrifying genes (nirK, nirS, nosZ clade I and II). It was found that earthworm in vivo N2O production rates were negatively correlated to mRNA of nosZ-I, but positively to nir/nos ratio, suggesting the active involvement of denitrifiers associated with ingested feed in these emissions. Earthworm body tissue was enriched with 15N, with no effect of DMPP. This showed that the worms had fed on the clover residues, and that DMPP did not interfere with feeding behavior or nitrogen assimilation. The observed effects show that DMPP treatment of clover residue before tillage has the potential to modify N2O emissions without adverse effects on residue decomposition or soil fauna.