Iron-containing zeolites are heterogeneous catalysts that exhibit remarkable activity in the selective oxidation of inert hydrocarbons and catalytic decomposition of nitrous oxide (N2O). The reduction of N2O is critical to both these functions, but experimental data tracking the iron active sites during N2O binding and activation are limited. Here, the N2O-ligated Fe(ii) active site in iron-exchanged zeolite beta is isolated and characterized by variable-temperature Mössbauer, diffuse reflectance UV-vis-NIR and Fourier transform infrared spectroscopy. N2O binds through the terminal nitrogen atom with substantial backbonding from the Fe(ii) centre at low temperature. At higher temperatures, the Fe–N2O interaction is weakened, facilitating isomerization to the O-bound form, which is competent in O-atom transfer. Density functional theory calculations show the geometric and electronic structure requirements for N2O binding and activation. A geometric distortion imposed by the zeolite lattice plays an important role in activating N2O. This highlights a mechanism for structural control over function in Fe-zeolite catalysts.