The Improved Limb Atmospheric Spectrometer on board the Advanced Earth Observing Satellite first detected the onset of denitrification at 19 and 20 km in the 1996/1997 Arctic winter stratosphere. Box model calculations along back trajectories were used to estimate the degree of denitrification caused by the formation of nitric acid trihydrate (NAT) particles inside liquid aerosols. The loss of reactive nitrogen calculated assuming conversion of nitric acid dihydrate to NAT and direct NAT formation explains well the observed loss, demonstrating that such NAT particle formation mechanisms play a critical role in Arctic denitrification.