Temperature is an important factor that affects nitrogen (N) transformations in an aquatic ecosystem. In this study, the surface sediments (0 to − 2 cm) from both outer and inner Meiliang Bay (OMB; IMB) were collected. A laboratory incubation experiment was conducted at different temperatures (10 °C, 20 °C and 30 °C) by the ¹⁵N tracing technique. Gross N transformation rates, including nitrification and denitrification, and NH₄⁺ (i_a) and NO₃⁻ (i_n) immobilization rates were estimated by the FLUAZ model. The results showed that both nitrification and denitrification rates of sediments were significantly higher in IMB than in OMB at any temperature (p < 0.05). The i_a reached the highest value and was of significant difference between the bays at 20 °C (p < 0.05) with i_n less than 0.4 mg kg⁻¹ dry weight sediment (d.w.s.) per day. Increasing temperature caused increased gross N transformation rates in each bay, and the temperature significantly affected nitrification, denitrification and i_a rates (p < 0.05). The N transformation rates differed among different sampling sites, mainly due to their significantly different total organic carbon values (p < 0.05). In both bay sediments, microbial immobilization assimilated more NH₄⁺ at 20 °C. The consumption of NH₄⁺ was more by nitrification (55–77%) than by immobilization in the surface sediments of the IMB; likewise 38–73% of NH₄⁺ was consumed by nitrification in the OMB. These findings suggested that temperature dramatically affected the N transformations in surface sediments of Taihu Lake, and the destination of inorganic N varied with temperature.