Applying biochar to soils may cause a win–win situation resulting in C sequestration and improvement of soil fertility and soil physical quality, depending on soil moisture condition, soil temperature and soil C/N ratio. An in-lab incubation experiment, laid out in quadratic general spinning design, was conducted to investigate effects of application of maize stalk and biochar made from maize stalk on N transformation in and N₂O emission from Loessal soil. Results show that in the soil applied with maize stalk, net nitrogen mineralization was influenced mainly by content of organic carbon, and then by contents of water and nitrogen, but in the soil applied with biochar, it was mainly by content of nitrogen and then by contents of water and organic carbon. The difference between the two carbon sources in effect on net N mineralization was extremely significant (p<0.01). Compared with maize stalk, biochar increased soil NO₃⁻-N and NH₄⁺-N concentrations, and significantly decreased N₂O emission. In the soil applied with biochar, the concentration of inorganic nitrogen changed slowly during the entire incubation period, while in the soil applied with maize stalk, it did drastically in the first two weeks of the incubation. Hence, it is obvious that application of biochar is conducive to reduction of emission of the greenhouse gas, N₂O.