Ni-containing methyl-coenzyme M reductase (MCR) is capable of catalyzing methane formation and has recently been observed to also be able to catalyze the reverse reaction, the anaerobic oxidation of methane. The forward reaction has been extensively studied theoretically before and was found to consist of two steps. The first step is rate-limiting and the second step was therefore treated at a lower level. For an accurate treatment of the reverse reaction, both steps have to be studied at the same level. In the present paper, the mechanisms for the reversible formation and oxidation of methane catalyzed by MCR have been investigated using hybrid density functional theory with recent developments, in particular including dispersion effects. An active-site model was constructed based on the X-ray crystal structure. The calculations indicate that the MCR reaction is indeed reversible and proceeds via a methyl radical and a Ni-S(CoM) intermediate with reasonable reaction barriers in both directions. In a competing mechanism, the formation of the crucial Ni-methyl intermediate, was found to be strongly endergonic by over 20 kcal mol−1 (including a barrier) with dispersion and entropy effects considered, and thus would not be reachable in a reasonable time under natural conditions.