Florida Bay, a shallow, subtropical estuary bounded by the Everglades and Florida Keys, is a semi-enclosed ecosystem that has been heavily altered by changes in water management, surrounding land use, and industrialization. In particular, alterations to its nitrogen cycle from numerous environmental and anthropogenic stressors have resulted in water quality degradation and subsequent reoccurring cyanobacteria blooms responsible for mass die-offs of seagrasses and sponges. This research sought to quantify the microbial processes controlling water-column dissolved inorganic nitrogen transformations in Florida Bay and constrain previously unknown components of its nitrogen budget. To accomplish the research’s goals, in situ 15N isotope tracer techniques were used to measure potential rates of ammonium assimilation and ammonia + nitrite oxidation (nitrification) in the water column at three sites representative of nearshore environments and restricted circulation basins. In September of 2013, a coincidental Synecochoccus picocyanobacterium bloom provided a unique opportunity to explore the detrimental impacts of such phenomena on surface-water DIN transformations. Collectively, results indicate that turnover times of ammonium by phytoplankton communities are relatively rapid and can occur in less than one day. Additionally, this study confirms the dominance of ammonium assimilation by pelagic bacteria in Florida Bay, and also illustrates the spatial heterogeneity of their activity. In contrast to assimilation, bay-wide rates of ammonia oxidation were only marginally above detection, likely as a result of substrate competition with ammonium-assimilating communities. This effect was amplified under dense cyanobacteria bloom conditions where ammonia oxidation rates approached our detection limits. However, rates were elevated in the excurrent plumes of six marine sponges that expelled copious amounts of ammonium, confirming the existence of ephemeral hotspots of nitrification in oligotrophic environments. Nitrite conversion to nitrate (NO2 oxidation) unexpectedly proceeded seven times faster than its prior step (NH4 oxidation) in every non-bloom measurement. This surprising discovery indicates the potential importance of a poorly understood mechanism of nitrite supply to the bay’s oxic water column.