Permafrost thaw in northern peatlands alters the ground thermal conditions, moisture, and chemistry that control microbial activity responsible for the production of greenhouse gases (GHGs) like methane from decomposing organic matter. This paper examines interactions between microbial communities, peat chemistry, moisture content, and temperature in the context of degrading palsa fields in the vast (372,000 km2), carbon rich, and rapidly warming permafrost peatlands of the Hudson Bay Lowlands. The temperature sensitivities of microbial GHG production and consumption from palsa and fen peat were assessed, and microbial community structure was examined as a potential constraint on GHG production in relation to changes in peat chemistry associated with thermokarst encroachment and active layer deepening. High CH4 production was observed from thermokarst peat, under controlled moisture and temperature conditions, associated with increased pH. A shift in methanogen taxonomic and metabolic diversity favoring aceticlastic methanogenesis was associated with changes in peat chemistry and pH from palsa to thermokarst fen peat. In palsa peat, CH4 production rates were lowest but most sensitive to temperature variations, due to recalcitrant carbon compounds. CH4 production was highly sensitive to increased temperatures, yet was balanced by high temperature sensitivity of CH4 oxidation in oxic conditions, consistent with the low temperature sensitivity of fluxes observed in field studies from other permafrost peatlands. Building on the microbial controls in this study, future work should explore how permafrost degradation and increased hydrological connectivity to mineral substrates are changing in this globally significant permafrost peatland, and how this impacts net CH4 emissions.