Methyl-coenzyme M reductase, the rate-limiting enzyme in methanogenesis and anaerobic methane oxidation, is responsible for the biological production of more than 1 billion tons of methane per year. The mechanism of methane synthesis is thought to involve either methyl-nickel(III) or methyl radical/Ni(II)-thiolate intermediates. We employed transient kinetic, spectroscopic, and computational approaches to study the reaction between the active Ni(I) enzyme and substrates. Consistent with the methyl radical-based mechanism, there was no evidence for a methyl-Ni(III) species; furthermore, magnetic circular dichroism spectroscopy identified the Ni(II)-thiolate intermediate. Temperature-dependent transient kinetics also closely matched density functional theory predictions of the methyl radical mechanism. Identifying the key intermediate in methanogenesis provides fundamental insights to develop better catalysts for producing and activating an important fuel and potent greenhouse gas.