Nitrogen, the major limiting factor of primary production in terrestrial ecosystem, contributes greatly to crop production since the invention of Haber-Bosch process. However, a substantial of nitrogen is lost to the surrounding environment, leading to low nitrogen use efficiency, nitrogen deposition, nitrate runoff and N₂O emission. The microbial groups of nitrogen fixers, nitrifier and denitrifier carry out nitrogen fixation, nitrification and denitrification, respectively. Another group of symbiotic fungi, Arbuscular mycorrhizal fungi (AMF), is also found to be important for nitrogen cycling. Recent studies reported that AMF could significantly affect soil nitrification, denitrification and N₂O emission. This review summarized the advance in the mechanisms by which AMF reduce N₂O emission:(I) AMF inhibit nitrifier activities and reduce N₂O production; (II) AMF exude labile carbon compounds to alleviate the competence between N₂OR and other Nr reductase, which promotes N₂O reduction to a greater extent; (III) AMF take up soil nitrogen and deliver them to host-plant and thus decrease nitrogen availability, lowering N₂O production. Finally, we envisaged future studies in strengthening the role of indigenous AMF in reducing N₂O emission. This review provides scientific evidence for future application of AMF in regulating N₂O emission and N cycling.