Members of Methylotenera are signature denitrifiers and methylotrophs commonly found together with methanotrophic bacteria in lakes and freshwater sediments. Here, we show that three distinct Methylotenera ecotypes were abundant in methane-rich groundwaters recharged during the Pleistocene. Just like in surface water biomes, groundwater Methylotenera often co-occurred with methane-oxidizing bacteria, even though they were generally unable to denitrify. One abundant Methylotenera ecotype expressed a pathway for aerobic methane production from methylphosphonate. This phosphate-acquisition strategy was recently found to contribute to methane production in the oligotrophic, oxic upper ocean. Gene organization, phylogeny, and 3D protein structure of the key enzyme, carbon-phosphorus lyase subunit PhnJ, were consistent with a role in phosphate uptake. We conclude that phosphate may be a limiting nutrient in productive, methane-rich aquifers, and that methylphosphonate degradation might contribute to groundwater methane production.