Methanogenesis is traditionally thought to occur only in highly reduced, anoxic environments. Wetland and rice field soils are well known sources for atmospheric methane, while aerated soils are considered sinks. Although methanogens have been detected in low numbers in some aerated, and even in desert soils, it remains unclear whether they are active under natural oxic conditions, such as in biological soil crusts (BSCs) of arid regions. To answer this question we carried out a factorial experiment using microcosms under simulated natural conditions. The BSC on top of an arid soil was incubated under moist conditions in all possible combinations of flooding and drainage, light and dark, air and nitrogen headspace. In the light, oxygen was produced by photosynthesis. Methane production was detected in all microcosms, but rates were much lower when oxygen was present. In addition, the δ(13)C of the methane differed between the oxic/oxygenic and anoxic microcosms. While under anoxic conditions methane was mainly produced from acetate, it was almost entirely produced from H(2)/CO(2) under oxic/oxygenic conditions. Only two genera of methanogens were identified in the BSC-Methanosarcina and Methanocella; their abundance and activity in transcribing the mcrA gene (coding for methyl-CoM reductase) was higher under anoxic than oxic/oxygenic conditions, respectively. Both methanogens also actively transcribed the oxygen detoxifying gene catalase. Since methanotrophs were not detectable in the BSC, all the methane produced was released into the atmosphere. Our findings point to a formerly unknown participation of desert soils in the global methane cycle.