Global nitrogen (N) emission and deposition have been increased rapidly due to massive mobilization of N which may have long- reaching impacts on ecosystems. Many agricultural and forest ecosystems have been identified as secondary N sources. In the present study, the input-output budget of inorganic N in a small forested watershed of subtropical China was investigated. Inorganic N wet deposition and discharge by stream water were monitored from March, 2007 to February, 2009. The concentrations and fluxes of inorganic N in wet precipitation and stream water and net retention of N were calculated. Global N input by dry deposition and biological fixation and N output by denitrification for forested watersheds elsewhere were reported as references to evaluate whether the studied forested watershed is a source or a sink for N. The results show that the inorganic N output by the stream water is mainly caused by NO3-N even though the input is dominated by NH4+-N. The mean flux of inorganic N input by wet precipitation and output by stream water is 1.672 and 0.537 g N/(m2.yr), respectively, which indicates that most of inorganic N input is retained in the forested watershed. Net retention of inorganic N reaches 1.135 g N/(m2.yr) considering wet precipitation as the main input and stream water as the main output, ff N input by dry deposition and biological fixation and output by denitlification are taken into account, this subtropical forested watershed currently acts as a considerable sink for N, with a net sink ranging from 1.309 to 1.913 g N/(m2-yr) which may enhance carbon sequestration of the terrestrial ecosystem.