This article will focus on Federal laws in the United States and some state laws. Be sure to check your local and state laws regarding the legality of nitrous oxide systems on vehicles in your area.
Depending on what state you live in, vehicle modifications can be common, seen on every other vehicle at a stoplight, or they can be rarely seen at all. While Nitrous Oxide systems are legal modifications federally, every state has different laws, varying drastically from entirely legal to situationally illegal to have installed on your vehicle.
Nitrous Oxide itself is not a controlled substance. Anyone with a nitrous bottle can walk into a speed shop and get a bottle filled or go down to the store and get a box of the little "whipped cream" canisters. It is not illegal to store or transport them in most states, but it is unlawful to use nitrous oxide as an inhalant, and in the case of automotive-grade nitrous, it can be hazardous because of the added sulfur.
For track-only vehicles or vehicles driven only on private property, nitrous oxide is legal everywhere. For street vehicles or any registered and insured vehicle, you will need to check your state and local laws carefully. Some states, such as California, have stringent state laws regarding vehicle modifications and aftermarket parts. For example, it is illegal to have a nitrous system without CARB certification installed on your street vehicle in California. Still, you can own and transport one, as long as it is not in the passenger compartment. Other states, such as Texas, have no such laws. Some counties do emissions testing, but a properly installed nitrous system should not affect your emissions.
In states or counties where you must pass an emissions or smog test, you will likely need to have catalytic converters on your vehicle. This doesn't cause a problem with nitrous; contrary to some popular myths, nitrous does not harm your catalytic converters. It is also not inherently a fire danger, as it is not flammable but rather an accelerant. This means that nitrous itself will not start a fire, but if there is a fire already, the nitrous will feed it and make it larger. The pressurized bottle could be seen as dangerous, but there are safeties in place to prevent bottle rupturing, such as the blow-off disc, which will burst and release the nitrous in the bottle if pressures exceed 3000 psi.