An integrated lipid biomarker–carbon isotope approach reveals new insight to microbial methane oxidation in the Gulf of Mexico gas-hydrate system. Hydrate-bearing and hydrate-free sediments were collected from the Gulf of Mexico slope using a research submersible. Phospholipid fatty acids consist mainly of C16–C18 compounds, which are largely derived from bacteria. The phospholipid fatty acids suggest that total biomass is enhanced 11–30-fold in gas-hydrate–bearing sediment compared to hydrate-free sediment. Lipid biomarkers indicative of sulfate-reducing bacteria are strongly depleted in 13C (δ13C = −48‰ to −70‰) in the hydrate-bearing samples, suggesting that they are involved in the oxidation of methane (δ13C = −47‰ for thermogenic methane and −70‰ for biogenic methane). Isotopic properties of other biomarkers suggest that sulfur-oxidizing bacteria (Beggiatoa) may also contribute to the lipid pool in hydrate-bearing samples, which are characterized by less negative δ13C values (to −11.2‰). In the hydrate-free sample, fatty acid biomarkers have δ13C values of −27.6‰ to −39.6‰, indicating that crude oil (average ∼−27‰) or terrestrial organic carbon (average ∼−20‰) are the likely carbon sources. Our results provide the first lipid biomarker–stable isotope evidence that sulfate- reducing bacteria play an important role in anaerobic methane oxidation in the Gulf of Mexico gas hydrates. The coupled activities of methane-oxidizing and sulfate-reducing organisms contribute to the development of ecosystems in deep-sea environments and result in sequestration of carbon as buried organic carbon and authigenic carbonates. These have implications for studying climate change based on carbon budgets.