Methane in the seabed is mostly oxidized to CO2 with sulfate as the oxidant before it reaches the overlying water column. This microbial oxidation takes place within the sulfate-methane transition (SMT), a sediment horizon where the downward diffusive flux of sulfate encounters an upward flux of methane. Across multiple sites in the Baltic Sea, we identified a systematic discrepancy between the opposing fluxes, such that more sulfate was consumed than expected from the 1:1 stoichiometry of methane oxidation with sulfate. The flux discrepancy was consistent with an oxidation of buried organic matter within the SMT, as corroborated by stable carbon isotope budgets. Detailed radiotracer experiments showed that up to 60% of the organic matter oxidation within the SMT first produced methane, which was concurrently oxidized to CO2 by sulfate reduction. This previously unrecognized "cryptic" methane cycling in the SMT is not discernible from geochemical profiles due to overall net methane consumption. Sedimentary gene pools suggested that nearly all potential methanogens within and beneath the SMT belonged to ANME-1 archaea, which are typically associated with anaerobic methane oxidation. Analysis of a metagenome-assembled genome suggests that predominant ANME-1 do indeed have the enzymatic potential to catalyze both methane production and consumption.