Hydroxylamine (NH2OH) is commonly regarded as a transient intermediate of ammonia oxidation and a potential precursor of nitrous oxide (N2O), yet the processes controlling its occurrence in natural waters remain poorly resolved. Here, we investigated NH2OH dynamics across freshwater, estuarine, and open-ocean environments and found that its distribution was decoupled from ammonia oxidation intensity. In freshwater, NH2OH concentrations were high near the surface despite low ammonia oxidation rates. In the open ocean, NH2OH remained detectable throughout the water column despite high uptake rates. These results suggest that NH2OH has additional sources and sinks beyond ammonia oxidation. In the estuary, NH2OH generally decreased with salinity and was strongly correlated with abiotic N2O production rather than to ammonia oxidation, linking its turnover directly to estuarine N2O formation. Our pure-culture experiments further revealed additional microbial pathways involved in NH2OH transformation beyond canonical ammonia oxidation. Together, these observations show that environmental NH2OH represents the net outcome of multiple biological and abiotic sources and sinks, rather than a direct proxy for ammonia oxidation intensity. Resolving this hidden turnover is essential for understanding aquatic nitrogen cycling and N2O production.