In Arctic wet tundra, microbial controls on organic matter decomposition are likely to be altered as a result of climatic disruption. Here, we present a study on the activity, diversity and vertical distribution of methane-cycling microbial communities in the active layer of wet polygonal tundra on Herschel Island. We recorded potential methane production rates from 5 to 40 nmol h−1 g−1 wet soil at 10 °C and significantly higher methane oxidation rates reaching values of 6–10 μmol h−1 g−1 wet soil. Terminal restriction fragment length polymorphism (T-RFLP) and cloning analyses of mcrA and pmoA genes demonstrated that both communities were stratified along the active layer vertical profile. Similar to other wet Arctic tundra, the methanogenic community hosted hydrogenotrophic (Methanobacterium) as well as acetoclastic (Methanosarcina and Methanosaeta) members. A pronounced shift toward a dominance of acetoclastic methanogens was observed in deeper soil layers. In contrast to related circum-Arctic studies, the methane-oxidizing (methanotrophic) community on Herschel Island was dominated by members of the type II group (Methylocystis, Methylosinus, and a cluster related to Methylocapsa). The present study represents the first on methane-cycling communities in the Canadian Western Arctic, thus advancing our understanding of these communities in a changing Arctic.