Efficient fertiliser nitrogen (N) management is critical to global food production and ecosystem health. Considering sheep grazing systems as whole ecosystems, and quantifying key ecosystem services provided by the soil microbial community, including plant N supply and N pollution mitigation, is essential in assessments of N use efficiency (NUE). Using a systems approach, we disassembled a low-intensity sheep (>5 ewe ha−1) grazed grassland, dominated by Lolium perenne, into a series of interlinked 15N-tracer experiments in North Wales during a summer growing season to assess fertiliser-N partitioning. 15N was traced into soil microbial protein-N via compound-specific amino acid 15N-stable isotope probing, with subsequent integration to provide a whole-system perspective. Retention of feed-N into sheep was low (11 %), despite high grass 15N-fertiliser uptake (58 %). The majority of grazed-N re-entered the soil N-cycle as excreta (47 % of total 15N) during the peak growing season. Quantifying 15N-assimilation into soil microbial protein (0–15 cm) demonstrated the central role soil microbes occupy in capturing excess fertiliser (16 %) and urinary-N (8 %) of the total 15N-fertiliser applied, thereby reducing N losses and subsequently supporting plant N supply. This approach emphasises how future management of moderate intensity grazing systems should target sheep NUE, alongside the role of the soil microbial community to retain, and later recycle N, for plant supply, optimising essential ecosystem service provisioning.