The nitrogen substitution in carbon materials is investigated theoretically using the density functional theory method. Our calculations show that nitrogen substitution decreases the hydrogen adsorption energy if hydrogen atoms are adsorbed on both nitrogen atoms and the neighboring carbon atoms. On the contrary, the hydrogen adsorption energy can be increased if hydrogen atoms are adsorbed only on the neighboring carbon atoms. The reason can be explained by the electronic structures analysis of N-substituted graphene sheets. Nitrogen substitution reduces the pi electron conjugation and increases the HOMO energy of a graphene sheet, and the nitrogen atom is not stable due to its 3-valent character. This raises an interesting research topic on the optimization of the N-substitution degree, and is important to many applications such as hydrogen storage and the tokamaks device. The electronic structure studies also explain well why nitrogen substitution increases the capacitance but decreases the electron conductivity of carbon electrodes as was experimentally observed in our experiments on the supercapacitor.