Invasive exotic earthworms are significantly influencing understory community composition, soil, and ecosystem processes in northern hardwood forests in North America, but their effect on the retention of nitrogen (N) has been inconclusive. We examined this in two northern hardwood forest sites in New York state, USA through a tracer study. In both spring and fall, we added tracer amounts of 15N as nitrate—to simulate atmospheric deposition—with the biologically less active tracer bromide (Br−) to areas both with and without large populations of invasive earthworms. Total recovery of 15N was lower in earthworm-invaded plots, largely due to less retention in litter and upper soil horizons. Although the strong relationship between retention in the upper soil horizons and total 15N recovery suggests that earthworm destruction of the forest floor may be one mechanism reducing the capacity for N retention, in some cases the mineral soil in earthworm-invaded plots retained substantial N. Biotic pools, particularly litter and microbial biomass, retained significantly less 15N in earthworm-invaded plots than in their uninvaded counterparts. In plots invaded by earthworms, negative effects of earthworms on trees were revealed through root-uptake assays suggesting somewhat greater plant demand for ammonium in the spring and in lower 15N recovery in maple seedlings the year following tracer addition. Although similar patterns of Br− movement across treatments suggested that earthworms had smaller effects on hydrologic tracer movement than expected, they appear to have significant effects on the biological processes that underlie N retention.