ZnO is a wide band gap, naturally n-type semiconductor with great promise for optoelectronic applications. To date, however, it has proven difficult to dope p-type, a prerequisite for device fabrication. Nitrogen is widely believed to be one of the most promising dopant candidates, however, experimental results to date have been inconsistent; recent theoretical formation energy calculations have indicated that Nitrogen preferentially incorporates into the ZnO lattice in the form of a N2- molecule at an O-site when a Nitrogen plasma source is used, leading to compensation rather than p-type doping. We show by a combination of X-ray absorption spectroscopy at the N K-edge of plasma-assisted molecular beam epitaxy grown ZnO and ab-initio simulations that in as-grown material, Nitrogen incorporates substitutionally on an O-site where it is expected to act as an acceptor. We have also observed the distinctive formation of molecular nitrogen bubbles upon rapid thermal annealing. These results suggest that effective p-type doping of ZnO with N may only be possible for metastable low-temperature growth processes.