Carbon release due to permafrost thaw represents a potentially major positive climate change feedback. The magnitude of carbon loss and the proportion lost as methane (CH4) vs. carbon dioxide (CO2) depend on factors including temperature, mobilization of previously frozen carbon, hydrology, and changes in organic matter chemistry associated with environmental responses to thaw. While the first three of these effects are relatively well understood, the effect of organic matter chemistry remains largely unstudied. To address this gap, we examined the biogeochemistry of peat and dissolved organic matter (DOM) along a ∼40-y permafrost thaw progression from recently- to fully thawed sites in Stordalen Mire (68.35°N, 19.05°E), a thawing peat plateau in northern Sweden. Thaw-induced subsidence and the resulting inundation along this progression led to succession in vegetation types accompanied by an evolution in organic matter chemistry. Peat C/N ratios decreased whereas humification rates increased, and DOM shifted toward lower molecular weight compounds with lower aromaticity, lower organic oxygen content, and more abundant microbially produced compounds. Corresponding changes in decomposition along this gradient included increasing CH4 and CO2 production potentials, higher relative CH4/CO2 ratios, and a shift in CH4 production pathway from CO2 reduction to acetate cleavage. These results imply that subsidence and thermokarst-associated increases in organic matter lability cause shifts in biogeochemical processes toward faster decomposition with an increasing proportion of carbon released as CH4. This impact of permafrost thaw on organic matter chemistry could intensify the predicted climate feedbacks of increasing temperatures, permafrost carbon mobilization, and hydrologic changes.