The assimilation of nitrate (NO−3), ammonium (NH+4), and urea by size‐fractionated natural assemblages of phytoplankton, as a function of the individual ambient nitrogen (N) nutrient concentrations, was investigated off the west coast of South Island, New Zealand, in February 1989. New production (ρ NO−3) contributed by all three size classes was higher inshore than offshore, and accounted for 40–61% and 19–29% of the total N production (ZpN), respectively. The reverse was true for regenerated production [ρ NH+4+ ρurea], a clear indication of the importance of NH+4and urea in offshore waters. Picoplankton (< 2 μm fraction), both inshore and offshore, was the major user of the regenerated N, and accounted for 43–62% of total regenerated production. The assimilation rates of all three size components achieved saturation at the larger additions of NO−3, NH+4, and urea, and the half‐saturation constants (Ks) of all three N nutrients for the three size classes in summer were higher than the respective ambient N concentrations. Low ambient dissolved nitrogenous nutrients (DNN), low dissolved reactive phosphate (DRP), and low Vamb/Vmaxratios recorded in summer off Westland imply that the natural assemblages of phytoplankton, especially the larger components in inshore waters, were under nutrient stress.