Anthropogenic nutrient loading of coastal aquifers has resulted in the discharge of nutrient-enriched groundwater to the coastal zone, with sweeping repercussions on aquatic community structure and ecosystem function. Groundwater-derived nutrient loading is known to initiate coastal eutrophication, hypoxia, and harmful algal blooms. However, most land-derived inputs of nitrogen to the coastal ocean are thought to be removed in heterotrophic estuarine and coastal sediments, which have traditionally been considered net fixed nitrogen sinks, reducing nutrient export to the oceans. Here, we provide evidence of net N2 fixation in heterotrophic estuarine sands affected by submarine groundwater discharge based on N2Ar measurements in benthic flux chamber incubations. Below the surface sediments, we observed efficient removal of fixed N. Together, these results suggest that net N2 fixation in sandy estuarine sediments is promoted by N limitation because of efficient fixed N removal in subsurface aquifer sediments and in muddy sediments elsewhere in this estuarine system. Our observations suggest that estuarine sediments in some anthropogenically affected ecosystems may not represent a net fixed N sink, limiting the potential attenuation of increased N loads and permitting increased N export to the open ocean.