Variations of N transformation processes, N2O release rates, and N2O emission pathways were investigated at different levels of salinity (stage 1, low salinity inhibition stage; stage 2, medium salinity promotion stage; and stage 3, high salinity promotion stage) using 15 N-18O dual-isotope labeling technique. Potential nitrification rates were reduced by saltwater incursion in stage 1, increased markedly in stage 3, and significantly inhibited potential denitrification rate under higher salinity. N2O emission significantly increased along salinity gradient in stage 3 due to the changes of potential nitrification rates. Saltwater incursion significantly increased the contribution of heterotrophic denitrification to N2O emission in stage 1. In stages 2 and 3, contributions of nitrifier denitrification and nitrification-coupled denitrification to N2O emission increased gradually, and nitrifier denitrification became the dominant pathway of N2O emission under high salinity. Changes of N transformations, N2O emission rates, and their pathways were regulated both by composition of microbial community and physicochemical properties of the sediment. Due to increased ammonification rate, organic N decomposition accelerated by saltwater can reduce the wetland N sink and may turn coastal wetland to significant reactive N source.