Using a velocity field obtained in a direct numerical simulation of isotropic turbulence at moderate Reynolds number the subgrid‐scale energy transfer in the spectral and the physical space representation is analyzed. The subgrid‐scale transfer is found to be composed of a forward and an inverse transfer component, both being significant in dynamics of resolved scales. Energy exchanges between the resolved and unresolved scales from the vicinity of the cutoff wave number dominate the subgrid‐scale processes and the energetics of the resolved scales are unaffected by the modes with wave numbers greater than twice the cutoff wave number. Correlations between the subgrid‐scale transfer and the large‐scale properties of the velocity field are investigated.