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Hypersalinity is common in coastal wetlands throughout warm, tropical, and arid regions. Climate‐induced changes in rainfall, sea level, and anthropogenic modification to basins and coastlines are likely to further increase salinization in these ecosystems. Yet, carbon cycling in hypersaline coastal wetlands is not well understood, and poorly constrained in climate models. In the Coorong, a eutrophic, hypersaline coastal lagoon, recognized as internationally important under the Ramsar convention, organic matter rapidly accumulates in deeper areas of the lagoon, through the settling of fine detrital particles, phytoplankton and suspended sediments. During initial surveys, elevated surface water methane (CH4) concentrations were observed above these fine depositional sediments. To identify the drivers of CH4 production, organic matter and sediment characteristics were assessed in surface sediments. Genetic markers (i.e., 16rDNA and the mcrA functional gene) were used to characterize microbial communities. With multiple lines of evidence, this study identifies organic matter, methanogen abundance, and salinity as important drivers of CH4 production, which is concentrated in depositional zones. Archaea were also more abundant in depositional zones, including methylotrophic methanogens: Methanofastidiosales, Methanomasiliicoccales, Methermicoccaceae, and Methanococcoides. These methanogens were highly correlated to CH4 in porewater, suggesting an influence of methylotrophic methanogenesis. To investigate further, metabolic genes were predicted from 16S rRNA with PICRUSt2. This represents the first effort to analyze CH4 dynamics in the Coorong, underscoring the need to integrate these unique ecosystems into global climate models to enhance our understanding of greenhouse gas dynamics and emissions in a changing climate. [ABSTRACT FROM AUTHOR]