Nitrous oxide decomposition on Fe/ZSM-5 catalysts, prepared by solid-state ion exchange followed by calcination in O2 at 823 K or high-temperature treatment in He at 1173 K, was studied by steady-state reaction and transient-response techniques. High-temperature treatment induces profound changes in the distribution of iron species, most notably a substantial fraction of oligonuclear and cationic Fe species are converted to Fe species stabilized by extra-framework Al (FeOAl species) in zeolite micropores. Nitrous oxide decomposition is much slower over calcined Fe/ZSM-5 than over its high-temperature-treated counterpart. Only over the latter catalysts is inhibition of N2O conversion by molecular oxygen observed. Transient response experiments show that molecular oxygen and nitrogen evolve simultaneously for calcined Fe/ZSM-5. It is proposed that the reaction proceeds over isolated Fe3+ sites in cationic species or oligonuclear Fe oxide species via a scavenging mechanism in which adsorbed oxygen species react with gaseous nitrous oxide to give molecular nitrogen and oxygen. In contrast, transient-response experiments for the high-temperature-treated catalyst show slow oxygen desorption compared with nitrogen formation, pointing to recombinative oxygen desorption being rate-limiting. This agrees with the finding that the rate is inhibited by molecular oxygen. It is proposed that ferrous ions in the high-temperature-treated catalyst show a much higher reactivity in nitrous oxide decomposition than Fe3+ sites. The Fe2+ species are most likely associated with the mixed iron and aluminium species formed upon high-temperature treatment.