Formaldehyde oxidation by cell-free extracts of Methanobacterium thermoautotrophicum was shown to drive methanogenesis from CH3-S-coenzyme M or HCHO under a nonreductive atmosphere of N2. Under N2 when HCHO was the sole source of carbon and reducing equivalents in the reaction, it underwent oxidation and reduction events (disproportionation), the sum of the reactions being 3 HCHO + H2O----CH4 + 2 HCOO - + 2H+. This reaction predicts a CH4/HCHO ratio of 1/3, which is in agreement with the experimental finding of 1/2.9. In extracts of the mesophilic methanogen Methanococcus voltae and the extreme thermophile Methanococcus jannaschii , which exhibited formate dehydrogenase activity, the CH4/HCHO ratio was 1/2. NADPH stimulated methane formation from HCHO under N2. An unidentified, oxygen-labile cofactor, the formaldehyde activation factor, present in boiled-cell extract was discovered. Methanopterin , an oxygen-stable molecule, also substituted for boiled-cell extract.