The effectiveness of Biodiesel Co-Product (BCP) in decreasing N leaching from an acidic soil (pH 3.7) and effects on greenhouse gas emissions and N functional genes following surface application (0–6-cm depth) of 4.5 mg BCP-C g−1 soil and complete mixing (0–18-cm depth) of 1.5 mg BCP-C g−1 soil, was investigated in a 35-day laboratory lysimeter experiment. The BCP additions significantly decreased AOA and AOB amoA gene copy numbers, especially from the surface BCP application, suggesting both methods therefore inhibited nitrification. Microbial biomass N and C significantly increased following both types of BCP incorporation, particularly with surface mixing, as compared to treatments without BCP. BCP increased nifH genes with both applications. Surface application of BCP produced higher emission rates of N2O and CO2 than complete mixing. Based upon (nirS+nirK)/nosZ ratios, more N2O emissions, caused by denitrification, came from the surface application than complete mixing, in support of the gaseous measurement of N2O. However, complete mixing was more effective than surface BCP application in decreasing N leaching: 2.14% of 15N fertilizer in the leachate from complete mixing, compared to 51% following surface application, and 68% without BCP addition. These findings demonstrate that complete mixing was more effective than surface BCP application in decreasing N leaching and gaseous losses. We conclude that BCP is an effective and biologically safe method to prevent nitrate leaching in this acidic Chinese soil.