Methane has exhibited significant interannual variability with a slowdown in its growth rate beginning in the 1980s. We use a 3-D chemical transport model accounting for interannually varying emissions, transport, and sinks to analyze trends in CH4 from 1988 to 1997. Variations in CH4 sources were based on meteorological and country-level socioeconomic data. An inverse method was used to optimize the strengths of sources and sinks for a base year, 1994. We present a best-guess budget along with sensitivity tests. The analysis suggests that the sum of emissions from animals, fossil fuels, landfills, and wastewater estimated using Intergovernmental Panel on Climate Change default methodology is too high. Recent bottom-up estimates of the source from rice paddies appear to be too low. Previous top-down estimates of emissions from wetlands may be a factor of 2 higher than bottom-up estimates because of possible overestimates of OH. The model captures the general decrease in the CH4 growth rate observed from 1988 to 1997 and the anomalously low growth rates during 1992–1993. The slowdown in the growth rate is attributed to a combination of slower growth of sources and increases in OH. The economic downturn in the former Soviet Union and Eastern Europe made a significant contribution to the decrease in the growth rate of emissions. The 1992–1993 anomaly can be explained by fluctuations in wetland emissions and OH after the eruption of Mount Pinatubo. The results suggest that the recent slowdown of CH4 may be temporary.