Freshwater lakes represent large methane sources that, in contrast to the Ocean, significantly contribute to non-anthropogenic methane emissions to the atmosphere. Particularly mixed lakes are major methane emitters, while permanently and seasonally stratified lakes with anoxic bottom waters are often characterized by strongly reduced methane emissions. The causes for this reduced methane flux from anoxic lake waters are not fully understood. Here we identified the microorganisms and processes responsible for the near complete consumption of methane in the anoxic waters of a permanently stratified lake, Lago di Cadagno. Interestingly, known anaerobic methanotrophs could not be detected in these waters. Instead, we found abundant gamma-proteobacterial aerobic methane-oxidizing bacteria active in the anoxic waters. In vitro incubations revealed that, among all the tested potential electron acceptors, only the addition of oxygen enhanced the rates of methane oxidation. An equally pronounced stimulation was also observed when the anoxic water samples were incubated in the light. Our combined results from molecular, biogeochemical and single-cell analyses indicate that methane removal at the anoxic chemocline of Lago di Cadagno is due to true aerobic oxidation of methane fuelled by in situ oxygen production by photosynthetic algae. A similar mechanism could be active in seasonally stratified lakes and marine basins such as the Black Sea, where light penetrates to the anoxic chemocline. Given the widespread occurrence of seasonally stratified anoxic lakes, aerobic methane oxidation coupled to oxygenic photosynthesis might have an important but so far neglected role in methane emissions from lakes.