Anaerobic oxidation of methane (AOM) by sulfate has been recognized as a critical process to maintain this greenhouse gas stability by limiting methane flux to the atmosphere. We show geochemical evidence for AOM in deep lake sediments and demonstrate that AOM is likely driven by iron (Fe) reduction. Pore-water profiles from Lake Kinneret (Sea of Galilee, Israel) show that this sink for methane is located below the 20-cm depth in the sediment, which is well below the depths at which nitrate and sulfate are completely exhausted, as well as below the zone of methanogenesis. Iron-dependant AOM was verified by Fe(III)-amended mesocosm studies using intact sediment cores, and native iron oxides were detectable throughout the sediments. Because anaerobic Fe(III) respiration is thermodynamically more favorable than both sulfate-dependent methanotrophy and methanogenesis, its occurrence below the zone of methane production supports the idea that reduction of sedimentary iron oxides is kinetically or biologically limited. Similar conditions are likely to prevail in other incompletely pyritized aquatic sediments, indicating that AOM with Fe(III) is an important global sink for methane.