Based on first-principles electronic structure calculations for N-related and native point defects in Zinc Oxide (ZnO), we propose a mechanism for the compensation of N acceptors. As compared to a normal N-2 source, the use of an active plasma N-2 gas generally increases the N solubility limit, because the N chemical potential is enhanced. However., whenever a pure N source is used, N acceptors are greatly compensated by donor defects, which may explain the difficulty in achieving low-resistance p-type ZnO. Major compensating donors for N acceptors are found to be different at low and high N doping levels, and also depend on the type of N-2 gas source. (C) 2001 Elsevier Science B.V. All rights reserved.