Oil palm plantations in Southeast Asia are the largest supplier of palm oil products and have been rapidly expanding in the last three decades even in peat-swamp areas. Oil palm plantations on peat ecosystems have a unique water management system that lowers the water table and, thus, may yield indirect N2O emissions from the peat drainage system. We conducted two seasons of spatial monitoring for the dissolved N2O concentrations in the drainage and adjacent rivers of palm oil plantations on peat swamps in Sarawak, Malaysia, to evaluate the magnitude of indirect N2O emissions from this ecosystem. In both the dry and wet seasons, the mean and median dissolved N2O concentrations exhibited over-saturation in the drainage water, i.e., the oil palm plantation drainage may be a source of N2O to the atmosphere. In the wet season, the spatial distribution of dissolved N2O showed bimodal peaks in both the unsaturated and over-saturated concentrations. The bulk δ15N of dissolved N2O was higher than the source of inorganic N in the oil palm plantation (i.e., N fertilizer and soil organic nitrogen) during both seasons. An isotopocule analysis of the dissolved N2O suggested that denitrification was a major source of N2O, followed by N2O reduction processes that occurred in the drainage water. The δ15N and site preference mapping analysis in dissolved N2O revealed that a significant proportion of the N2O produced in peat and drainage is reduced to N2 before being released into the atmosphere.