Active methane production in oxygenated lake waters challenges the long-standing paradigm that microbial methane production occurs only under anoxic conditions and forces us to rethink the ecology and environmental dynamics of this powerful greenhouse gas. Methane production in the upper oxic water layers places the methane source closer to the air–water interface, where convective mixing and microbubble detrainment can lead to a methane efflux higher than that previously assumed. Microorganisms may produce methane in oxic environments by being equipped with enzymes to counteract the effects of molecular oxygen during methanogenesis or using alternative pathways that do not involve oxygen-sensitive enzymes. As this process appears to be influenced by thermal stratification, water transparency, and primary production, changes in lake ecology due to climate change will alter methane formation in oxic water layers, with far-reaching consequences for methane flux and climate feedback.