[OAC_Sparky]

Technically, nitrogen gas isn't "inert" but it's pretty close (only noble gasses like Helium, Argon and Neon are completely inert), it has a low reactivity. If it was completely inert it would not combine with oxygen to produce nitrous oxide (which is combustible) and nitrogen dioxide.

The advantage of using nitrogen is that when it's pumped in it has very little humidity (moisture), and no oxygen -- which keeps the inner rim from rusting/oxidizing (causing rim leaks) and the vulcanized rubber from oxidizing. It also tends not to expand as much when heated when compared to regular air, avoiding too great of a pressure rise when the tires get hot.