Among predicted impacts of climate change in the Arctic are greater thaw depth and shifts in vegetation patterns and hydrology that are likely to increase organic carbon and nutrient loading to lakes. We measured substrate limitation of sediment methane (CH4) flux, examined pathways of methanogenesis, and potential CH4 oxidation using stable isotope labeled acetate in intact sediment cores from arctic lake GTH 112 (68°40′20″N, 149°14′57″W). We hypothesized that the acetoclastic pathway would dominate methanogenesis, reflecting dissolved organic carbon supply from the surrounding landscape, and that sediment CH4 flux would be stimulated by addition of acetate. Experiments demonstrated acetate limitation of sediment CH4 flux with short-term CH4 flux response to availability of acetate, high rates of CH4 oxidation, and strong dominance of the acetoclastic over the hydrogenotrophic methanogenic pathway. The experiments also indicated that isotopic fractionation effects during isotope enrichment experiments are large during methanogenesis and can alter the methanogenic pathways being investigated. Under oxic conditions, CH4 oxidation at the sediment–water interface or in the water column is likely to account for much of diffusive CH4 flux, but under anoxic hypolimnetic conditions and increased substrate availability, conditions that are likely to occur with climate change, sediment CH4 flux will likely increase, with oxidation utilizing a smaller portion of sediment CH4 production.