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Thermokarst (thaw) lakes emit methane (CH4) to the atmosphere formed from thawed permafrost organic matter (OM), but the relative magnitude of CH4 production in surface lake sediments vs. deeper thawed permafrost horizons is not well understood. We assessed anaerobic CH4 production potentials from various depths along a 590 cm long lake sediment core that captured the entire sediment package of the talik (thaw bulb) beneath the center of an interior Alaska thermokarst lake, Vault Lake, and the top 40 cm of thawing permafrost beneath the talik. We also studied the adjacent Vault Creek permafrost tunnel that extends through ice-rich yedoma permafrost soils surrounding the lake and into underlying gravel. Our results showed CH4 production potentials were highest in the organic-rich surface lake sediments, which were 151 cm thick (mean ± SD: 5.95 ± 1.67 μg C–CH4 g dw−1 d−1; 125.9 ± 36.2 μg C–CH4 g C−1org d−1). High CH4 production potentials were also observed in recently thawed permafrost (1.18 ± 0.61 μg C–CH4g dw−1 d−1; 59.60± 51.5 μg C–CH4 g C−1org d−1) at the bottom of the talik, but the narrow thicknesses (43 cm) of this horizon limited its overall contribution to total sediment column CH4 production in the core. Lower rates of CH4 production were observed in sediment horizons representing permafrost that has been thawing in the talik for a longer period of time. No CH4 production was observed in samples obtained from the permafrost tunnel, a non-lake environment. Our findings imply that CH4 production is highly variable in thermokarst lake systems and that both modern OM supplied to surface sediments and ancient OM supplied to both surface and deep lake sediments by in situ thaw and shore erosion of yedoma permafrost are important to lake CH4 production.