<p>Lignin is a natural plant polymer that accounts for about one-third of the organic carbon in the biosphere. Global warming has led to shrub encroachment and increased lignin input into peatlands. Generally, lignin is recalcitrant to microbial degradation in anoxic environments. Here we report methane production from lignin and its constituent monophenols in a flooded peatland in China based on microcosm experiments. Methane production was higher in the moderate shrub-covered peatland soils that have greater lignin contents compared with those of herb-covered soils. Adding lower contents of lignin and its monophenols promoted methane production of herb soil microcosms, and lignin contributed approximately 1.2–14.2% of the total methane emissions. Isotope tracing and dynamic metabolomic analyses revealed that the methoxy group of vanillin was first converted to methane, and then the aromatic ring carbons were fermented into CO₂, acetate, propionate and (iso)butyrate. Lignin and its monophenols enriched the methylotrophic methanogens <i>Methanomassiliicoccus</i> and <i>Methanosarcina</i>, suggesting their involvement in methoxydotrophic methanogenesis. We suggest that lignin should not be overlooked as a source of methane in peatlands, especially given increasing shrub encroachment under global warming.</p>