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Geomorphic disturbances to surrounding terrain induced by thermal degradation of permafrost often lead to surface ponding or soil saturation. However, interactions between soil moisture and temperature on belowground carbon processes are not fully understood. We conducted batch incubation for three temperature treatments [constant freezing (CF), constant thawing (CT), and fluctuating temperatures (FTC)] and two soil moisture conditions (ponded and unsaturated). Extracellular enzyme activity was higher under ponded conditions than under unsaturated conditions, resulting in higher dissolved organic carbon (DOC) levels for ponded conditions. More CO2 and less CH4 were emitted under unsaturated conditions than under ponded conditions. Carbon dioxide emission was similar for CT and FTC treatments regardless of moisture conditions. However, CH4 emission was higher under ponded conditions than under unsaturated conditions for CT treatments, but was very low for FTC treatments regardless of moisture conditions. Little CO2 and CH4 were produced in CF treatments. Despite similar CO2 and CH4 emission levels for CT and FTC treatments, lower DOC levels were observed in the latter, indicating slower soil organic carbon (SOC) decomposition. Similar DOC variation patterns between CT and CF treatments indicated that SOC decomposition was considerable and further degradation to CO2 or CH4 was negligible even for CF treatments. The SOC decomposition and CO2 and CH4 emissions were considerable for FTC treatments. Our results suggest that labile-C produced during SOC decomposition in seasonally frozen soils and permafrost may provide supplemental substrates that would enhance the positive feedback to climate change with rising temperatures and wetter conditions.