Permafrost soils of high‐latitude wetlands are an important source of atmospheric methane. In order to improve our understanding of the large seasonal fluctuations of trace gases, we measured the CH4 fluxes as well as the fundamental processes of CH4 production and CH4 oxidation under in situ conditions in a typical polygon tundra in the Lena Delta, Siberia. Net CH4 fluxes were measured from the polygon depression and from the polygon rim from the end of May to the beginning of September 1999. The mean flux rate of the depression was 53.2 ± 8.7 mg CH4 m−2 d−1 with maximum in mid‐July (100–120 mg CH4 m−2 d−1), whereas the mean flux rate of the dryer rim part of the polygon was 4.7 ± 2.5 CH4 m−2 d−1. The microbial CH4 production and oxidation showed significant differences during the vegetation period. The CH4 production in the upper soil horizon of the polygon depression was about 10 times higher (38.9 ± 2.9 nmol CH4 h−1 g−1) in July than in August (4.7 ± 1.3 nmol CH4 h−1 g−1). The CH4 oxidation behaved exactly in reverse: the oxidation rate of the upper soil horizon was low (1.9 ± 0.3 nmol CH4 h−1 g−1) in July compared to the activity in August (max. 7.0 ± 1.3 nmol CH4 h−1 g−1). The results indicated clearly an interaction between the microbiological processes with the observed seasonal CH4 fluctuations. However, the CH4 production is primarily substrate dependent, while the oxidation is dependent on the availability of oxygen. The temperature plays only a minor role in both processes, probably because the organisms are adapted to extreme temperature conditions of the permafrost. For the understanding of the carbon dynamics in permafrost soils, a differentiated small‐scale view of the microbiological processes and the associated modes of CH4 fluxes is necessary, especially at key locations such as the Siberian Arctic