Depth profiles of dissolved nitrous oxide (N2O) were measured in the central and western Arabian Sea during four cruises in May and July--August 1995 and May--July 1997 as part of the German contribution to the Arabian Sea Process Study of the Joint Global Ocean Flux Study. The vertical distribution of N2O in the water column on a transect along 65 ¿E showed a characteristic double-peak structure, indicating production of N2O associated with steep oxygen gradients at the top and bottom of the oxygen minimum zone. We propose a general scheme consisting of four ocean compartments to explain the N2O cycling as a result of nitrification and denitrification processes in the water column of the Arabian Sea. We observed a seasonal N2O accumulation at 600--800 m near the shelf break in the western Arabian Sea. We propose that, in the western Arabian Sea, N2O might also be formed during bacterial oxidation of organic matter by the reduction of IO3- to I-, indicating that the biogeochemical cycling of N2O in the Arabian Sea during the SW monsoon might be more complex than previously thought. A compilation of sources and sinks of N2O in the Arabian Sea suggested that the N2O budget is reasonably balanced. ¿ 2001 American Geophysical Union