We investigated methane production and oxidation and the depth distribution and phylogenetic affiliation of a functional gene for methanogenesis, methyl coenzyme M reductase subunit A (mcrA), at two sites of the Integrated Ocean Drilling Program Expedition 311. These sites, U1327 and U1329, are respectively inside and outside the area of gas hydrate distribution on the Cascadia Margin. Radiotracer experiments using 14C-labelled substrates indicated high potential methane production rates in hydrate-bearing sediments [128–223 m below seafloor (mbsf)] at U1327 and in sediments between 70 and 140 mbsf at U1329. Tracer-free experiments indicated high cumulative methane production in sediments within and below the gas hydrate layer at U1327 and in sediments below 70 mbsf at U1329. Stable tracer experiments using 13C-labelled methane showed high potential methane oxidation rates in near-surface sediments and in sediments deeper than 100 mbsf at both sites. Results of polymerase chain reaction amplification of mcrA in DNA were mostly consistent with methane production: relatively strong mcrA amplification was detected in the gas hydrate-bearing sediments at U1327, whereas at U1329, it was mainly detected in sediments from around the bottom-simulating reflector (126 mbsf). Phylogenetic analysis of mcrA separated it into four phylotype clusters: two clusters of methanogens, Methanosarcinales and Methanobacteriales, and two clusters of anaerobic methanotrophic archaea, ANME-I and ANME-II groups, supporting the activity measurement results. These results reveal that in situ methanogenesis in deep sediments probably contributes to gas hydrate formation and are inconsistent with the geochemical model that microbial methane currently being generated in shallow sediments migrates downward and contributes to the hydrate formation. At Site U1327, gas hydrates occurred in turbidite sediments, which were absent at Site U1329, suggesting that a geological setting suitable for a gas hydrate reservoir is more important for the accumulation of gas hydrate than microbiological properties.