We measured the fluxes of carbon dioxide (CO2) and nitrous oxide (N2O) and relevant environmental variables for two treatments in a legume pasture system on an acid soil in southeast Australia during 1993. The two treatments were control and liming (to reduce soil acidity). These trace gas fluxes were also simulated using a revised version of the process-based model DNDC. Our version of the DNDC (Denitrification and Decomposition) model has been significantly modified by including a surface energy balance submodel; by using more comprehensive formulations for soil evaporation, plant transpiration, plant growth, and plant nitrogen uptake; by using an implicit difference scheme to solve the diffusion equations governing heat and water fluxes in the soil; and by initializing the soil organic carbon in different pools using their relative proportions at the steady state. The simulated average nighttime CO2 fluxes from the control plot were 0.07, 0.05, and 0.16 g C m-2h-1 in March, August, and October of 1993, respectively, as compared with the measured average nighttime CO2 fluxes of 0.10, 0.07, and 0.14 g C m-2h-1 for the corresponding periods. The simulated average daily N2O fluxes from the control plot were 0.09, 0.03, and 0.04 mg N m-2d-1 in March, August, and October of 1993, respectively, as compared with the measured average daily N2O fluxes of 0.07, 0.03, and 0.16 mg N m-2d-1 for the corresponding periods. Similar agreements between model simulations of CO2 and N2O fluxes and measurements were also obtained for the limed plot. We find that the simulations by model DNDC and field observations of gaseous N2O emissions agree well over a range of 3 orders of magnitude. We conclude that the daily and seasonal variations of CO2 and N2O fluxes on a plot scale can be reasonably simulated by this process-based model. The model shows that the fraction of N2O produced aerobically from nitrification was 73% for the control plot and 55% for the limed plots in 1993; therefore mitigation strategies for reducing N2O emission from such temperate or semiarid nitrogen-limited systems in Australia should be focused on the N2O loss from nitrification. ¿ 1997 American Geophysical Union