Methane is a key compound in the global carbon cycle that influences both nutrient cycling and the Earth's climate. A limited number of microorganisms control the flux of biologically generated methane, including methane-metabolizing archaea that either produce or consume methane. Methanogenic and methanotrophic archaea belonging to the phylum Euryarchaeota share a genetically similar, interrelated pathway for methane metabolism. The key enzyme in this pathway, the methyl-coenzyme M reductase (Mcr) complex, catalyses the last step in methanogenesis and the first step in methanotrophy. The discovery of mcr and divergent mcr-like genes in new euryarchaeotal lineages and novel archaeal phyla challenges long-held views of the evolutionary origin of this metabolism within the Euryarchaeota. Divergent mcr-like genes have recently been shown to oxidize short-chain alkanes, indicating that these complexes have evolved to metabolize substrates other than methane. In this Review, we examine the diversity, metabolism and evolutionary history of mcr-containing archaea in light of these recent discoveries.