Anaerobic ammonium oxidation is a recent addition to the microbial nitrogen cycle, and its metabolic pathway, including the production and conversion of its intermediate hydrazine, is not well understood. Therefore, the effect of hydroxylamine addition on the hydrazine metabolism of anaerobic ammonium-oxidizing (anammox) bacteria was studied both experimentally and by mathematical modeling. It was observed that hydroxylamine was disproportionated biologically in the absence of nitrite into dinitrogen gas and ammonium. Little hydrazine accumulated during this process; however, rapid hydrazine production was observed when nearly all hydroxylamine was consumed. A mechanistic model is proposed in which hydrazine is suggested to be continuously produced from ammonium and hydroxylamine (possibly via nitric oxide) and subsequently oxidized to N(2). The electron acceptor for hydrazine oxidation is hydroxylamine, which is reduced to ammonium. A decrease in the hydroxylamine reduction rate, therefore, leads to a decrease in the hydrazine oxidation rate, resulting in the observed hydrazine accumulation. The proposed mechanism was verified by a mathematical model which could explain and predict most of the experimental data.