AbstractUnderstanding the mechanisms underlying variations in carbon isotope discrimination (Δ) in C4 plants is critical for predicting the C3/C4 ratio in C3/C4 mixed grassland. The value of Δ is determined by bundle sheath leakiness (Ф) and the ratio of intercellular to ambient CO₂ concentration (C _i /C _a ). Leaf nitrogen concentration (N _leaf ) is considered a driver of Δ in C4 plants. However, little is known about how N _leaf affects Ф and C _i /C _a , and subsequently Δ. Here leaf carbon isotope composition, N _leaf , Ф, and leaf gas exchange were measured in Cleistogenes squarrosa, a dominant C4 species in the Inner Mongolia grassland. Δ remained relatively stable under variable N and water supply. Higher N supply and lower water supply increased N _leaf , stimulated photosynthesis and further decreased C _i /C _a . High N supply increased Ф, which responded weakly to water supply. N _leaf exerted similar effects on C _i /C _a and on Ф in the field and pot experiments. Pooling all the data, N _leaf explained 73% of the variation in C _i /C _a . Overall, both Ф and C _i /C _a determined Δ; however, the contribution of Ф was stronger. N _leaf influenced Δ primarily though C _i /C _a , rather than Ф. Ф should be considered in estimating Δ of C4 endmember.