A new process for the removal of nitrogen from wastewater is introduced. The process involves three steps: (1) partial nitrification of NH4+ to NO2−; (2) partial anoxic reduction of NO2− to N2O; and (3) N2O conversion to N2 with energy recovery by either catalytic decomposition to N2 and O2 or use of N2O to oxidize biogas CH4. Steps 1 and 3 have been previously established at full-scale. Accordingly, bench-scale experiments focused on step 2. Two strategies were evaluated and found to be effective: in the first, Fe(II) was used to abiotically reduce NO2− to N2O; in the second, COD stored as polyhydroxybutyrate (PHB) was used as the electron donor for partial heterotrophic reduction of NO2− to N2O. For abiotic reduction with Fe(II), the efficiency of conversion of NO2− to N2O was over 90% with 98% nitrogen removal from water. For partial heterotrophic denitrification, different selection conditions were imposed on acetate- and nitrite-fed communities initially derived from waste activated sludge. No N2O was detected when acetate and nitrite were supplied continuously, but N2O was produced when acetate and nitrite were added as pulses. N2O conversion efficiency was dependent upon the method of addition of acetate and nitrite. When acetate and nitrite were added together (coupled feeding), the N2O conversion efficiency was 9–12%, but when acetate and nitrite additions were decoupled, the N2O conversion efficiency was 60–65%. Decoupled substrate addition selected for a microbial community that accumulated polyhydroxybutyrate (PHB) during an anaerobic period after acetate addition then consumed PHB and reduced NO2− during the subsequent anoxic period. The biological N removal efficiency from the water was 98% over more than 200 cycles. This indicates that decoupled operation can sustain significant long-term N2O production. Compared to conventional nitrogen removal, the three-step process, referred to here as Coupled Aerobic–anoxic Nitrous Decomposition Operation (CANDO), is expected to decrease oxygen requirements, decrease biomass production, increase organic matter available for recovery as biogas methane, and enable energy recovery from nitrogen, but pilot-scale studies are needed.