Models predict that thaw of permafrost soils at northern high latitudes will release tens of billions of tonnes of carbon (C) to the atmosphere by 2100 (refs 1,2,3). The effect on the Earth’s climate depends strongly on the proportion of this C that is released as the more powerful greenhouse gas methane (CH4), rather than carbon dioxide (CO2) (refs 1,4); even if CH4 emissions represent just 2% of the C release, they would contribute approximately one-quarter of the climate forcing5. In northern peatlands, thaw of ice-rich permafrost causes surface subsidence (thermokarst) and water-logging6, exposing substantial stores (tens of kilograms of C per square meter, ref. 7) of previously frozen organic matter to anaerobic conditions, and generating ideal conditions for permafrost-derived CH4 release. Here we show that, contrary to expectations, although substantial CH4 fluxes (>20 g CH4 m−2 yr−1) were recorded from thawing peatlands in northern Canada, only a small amount was derived from previously frozen C (<2 g CH4 m−2 yr−1). Instead, fluxes were driven by anaerobic decomposition of recent C inputs. We conclude that thaw-induced changes in surface wetness and wetland area, rather than the anaerobic decomposition of previously frozen C, may determine the effect of permafrost thaw on CH4 emissions from northern peatlands.