Permafrost thaw is likely to create a substantial positive feedback to climate change, as previously frozen organic carbon (OC) becomes available for biological metabolism and is released to the atmosphere. Microbes mediate transformation and release of formerly stored C, while also consuming recently fixed plant C and age stored C in the seasonally-thawed peat active layer. This biological activity releases carbon dioxide (CO2) and methane (CH4) to the atmosphere. To investigate microbial C cycling changes with permafrost thaw, we examined how microbial community C substrate degradation differed between two thaw features in Stordalen Mire, Sweden, located at the discontinuous southern edge of the permafrost zone. The progression of thaw results in increasing organic matter lability, shifting microbial community composition, and changing C gas emissions. However, the interrelationship of the population metabolism with the gas release remains unclear. We analyzed microbial C substrate utilization in bog and fen sites using Biolog Ecoplates and measurements of CH4 and CO2 production in anaerobic incubations of peat with select C substrate amendments. Overall, the results suggest that, with permafrost thaw, substrates for microbial carbon processing diversify, utilization of these substrates reaches a greater extent, and pathways of carbon degradation shift towards methanogenesis.