A change in German energy policy has resulted in a strong increase in the number of biogas plants in Germany. As a consequence, huge amounts of nutrient-rich residues, the by-products of the fermentative process, are used as organic fertilizers. Drained peatlands are increasingly used to satisfy the huge demand for fermentative substrates (e.g., energy crops, grass silage) and the digestate is returned to the peatlands. However, drained organic soils are considered as hot spots for nitrous oxide (N₂O) emissions and organic fertilization is additionally known to increase N₂O emissions from managed grasslands. Our study addressed the questions (a) to what extent biogas digestate and cattle slurry application increase N₂O and methane (CH₄) fluxes as well as the mineral nitrogen use efficiency (NUE_min) and grass yield, and (b) how different soil organic matter contents (SOMs) and nitrogen contents promote the production of N₂O. In addition NH₃ volatilization was determined at one application event to obtain first clues with respect to the effects of soil and fertilizer types. The study was conducted at two sites within a grassland parcel, which differed in their soil organic carbon (SOC) and N contents. At each site (named C_org-medium and C_org-high) three plots were established: one was fertilized five times with biogas digestate, one with cattle slurry, and the third served as control plot. On each plot, fluxes of N₂O and CH₄ were measured on three replicates over 2 years using the closed chamber method. For NH₃ measurements we used the calibrated dynamic chamber method. On an annual basis, the application of biogas digestate significantly enhanced the N₂O fluxes compared to the application of cattle slurry and additionally increased the plant N-uptake and NUE_min. Furthermore, N₂O fluxes from the C_org-high treatments significantly exceeded N₂O fluxes from the C_org-medium treatments. Annual cumulative emissions ranged from 0.91 ± 0.49 to 3.14 ± 0.91 kg N ha⁻¹ yr⁻¹. Significantly different CH₄ fluxes between the investigated treatments or the different soil types were not observed. Cumulative annual CH₄ exchange rates varied between −0.21 ± 0.19 and −1.06 ± 0.46 kg C ha⁻¹ yr⁻¹. Significantly higher NH₃ losses, NUE_min and grass yields from treatments fertilized with biogas digestate compared to those fertilized with cattle slurry were observed. The total NH₃ losses following the splash plate application were 18.17 kg N ha⁻¹ for the digestate treatments and 3.48 kg N ha⁻¹ for the slurry treatments (36 and 15% of applied NH₄⁺–N). The observed linear increase of 16 days' cumulative N₂O–N exchange or annual N₂O emissions, with mean groundwater level and ammonium application rate, reveals the importance of site-adapted N fertilization and the avoidance of N surpluses in C_org-rich grasslands.