Reducing nitrous oxide (N₂O) emission from farmland is crucial for alleviating global warming since agriculture is an important contributor of atmospheric N₂O. Returning biochar to agricultural fields is an important measure to mitigate soil N₂O emissions. Accurately quantifying the effect of biochar on the process of N₂O production and its driving factors is critical for achieving N₂O emission mitigation. Recently, stable isotope techniques such as isotope labeling, natural abundance, and site preference (SP) value, have been widely used to distinguish N₂O production pathways. However, the different isotope methods have certain limitations in distinguishing N₂O production in biochar-amended soils where it is difficult to identify the relative contribution of individual pathways for N₂O production. This paper systematically reviews the pathways of soil N₂O production (nitrification, nitrifier denitrification, bacterial denitrification, fungal denitrification, coupled nitrification-denitrification, dissimilatory nitrate reduction to ammonium and abiotic processes) and their response mechanism to the addition of biochar, as well as the development history and advantages of isotopes in differentiating N₂O production pathways in biochar-amended soils. Moreover, the limitations of current research methods and future research directions are proposed. These results will help resolve how biochar affects different processes that lead to soil N₂O generation and provide a scientific basis for sustainable agricultural carbon sequestration and the fulfilment of carbon neutrality goals.