Recent studies have suggested that the marine contribution of methane from shallow regions and melting marine-terminating glaciers may have been underestimated. Here we report on methane sources and potential sinks associated with methane seeps in Cumberland Bay, South Georgia's largest fjord system. The average organic carbon content in the upper 8 m of the sediment is around 0.65 wt %; this observation combined with Parasound data suggest that the methane gas accumulations probably originate from peat-bearing sediments currently located several tens of meters below the seafloor. Only one of our cores indicates upward advection; instead most of the methane is transported via diffusion. Sulfate and methane flux estimates indicate that a large fraction of methane is consumed by anaerobic oxidation of methane (AOM). Carbon cycling at the sulfate-methane transition (SMT) results in a marked fractionation of the δ13C-CH4 from an estimated source value of -65‰ to a value as low as -96‰ just below the SMT. Methane concentrations in sediments are high, especially close to the seepage sites (40 mM); however, concentrations in the water column are relatively low (max. 58 nM) and can be observed only close to the seafloor. Methane is trapped in the lowermost water mass; however, measured microbial oxidation rates reveal very low activity with an average turnover of 3.1 years. We therefore infer that methane must be transported out of the bay in the bottom water layer. A mean sea-air flux of only 0.005 nM/m2 s confirms that almost no methane reaches the atmosphere.