Ethane, the second most abundant hydrocarbon gas in the seafloor, is efficiently oxidized by anaerobic archaea in syntrophy with sulfate-reducing bacteria. Here, we report the 0.99-angstrom-resolution structure of the proposed ethane-activating enzyme and describe the specific traits that distinguish it from methane-generating and -consuming methyl-coenzyme M reductases. The widened catalytic chamber, harboring a dimethylated nickel-containing F430 cofactor, would adapt the chemistry of methyl-coenzyme M reductases for a two-carbon substrate. A sulfur from methionine replaces the oxygen from a canonical glutamine as the nickel lower-axial ligand, a feature conserved in thermophilic ethanotrophs. Specific loop extensions, a four-helix bundle dilatation, and posttranslational methylations result in the formation of a 33-angstrom-long hydrophobic tunnel, which guides the ethane to the buried active site as confirmed with xenon pressurization experiments.