Emissions of nitrous oxide (N.sub.2 O) are lowered in a fluidized bed reactor utilizing two-staged combustion. A lower region of the furnace section is operated under substoichiometric conditions so that combustion in the lower region is incomplete, thereby inhibiting formation of N.sub.2 O and nitrogen oxides (NO.sub.x). An upper region of the furnace section is operated under oxidizing conditions to promote further combustion. An amount of particulate material is present in the upper region, and this amount of particulate material in the upper region is controlled to maintain a temperature in the upper region for destroying N.sub.2 O formed during combustion. The amount of particulate material present in the upper region may in turn be controlled by controlling the particulate material entrained from the lower region to the upper region. The temperature is also preferably controlled within a range to permit sulfur capture by sorbent particles so that emissions of N.sub.2 O, NO.sub.x, and oxides of sulfur (SO.sub.x) may be simultaneously lowered.