Release of abiotic methane from marine seeps into the atmosphere is a major source of this potent greenhouse gas. Methanotrophic microorganisms in methane seeps use methane as carbon and energy source, thus significantly mitigating global methane emissions. Here we investigated microbial methane oxidation at the sediment-water interface of a shallow marine methane seep. Metagenomics and metaproteomics, combined with 13C-methane stable isotope probing, demonstrated that various members of the gammaproteobacterial family Methylococcaceae were the key players for methane oxidation, catalyzing the first reaction step to methanol. We observed a transfer of carbon to methanol-oxidizing methylotrophs of the betaproteobacterial family Methylophilaceae, suggesting an interaction between methanotrophic and methylotrophic microorganisms that allowed for rapid methane oxidation. From our microcosms, we estimated methane oxidation rates of up to 871 nmol of methane per gram sediment and day. This implies that more than 50% of methane at the seep is removed by microbial oxidation at the sediment-water interface, based on previously reported in situ methane fluxes. The organic carbon produced was further assimilated by different heterotrophic microbes, demonstrating that the methane-oxidizing community supported a complex trophic network. Our results provide valuable eco-physiological insights into this specialized microbial community performing an ecosystem function of global relevance.