Ljubljana marsh in Slovenia is a 16 000 ha area of partly drained fen, intended to be flooded to restore its ecological functions. The resultant water-logging may create anoxic conditions, eventually stimulating production and emission of methane, the most important greenhouse gas next to carbon dioxide. We examined the upper layer (~30 cm) of Ljubljana marsh soil for microbial processes that would predominate in water-saturated conditions, focusing on the potential for iron reduction, carbon mineralization (CO₂ and CH₄ production), and methane emission. Methane emission from water-saturated microcosms was near minimum detectable levels even after extended periods of flooding (>5 months). Methane production in anoxic soil slurries started only after a lag period of 84 d at 15&deg;C and a minimum of 7 d at 37&deg;C, the optimum temperature for methanogenesis. This lag was inversely related to iron reduction, which suggested that iron reduction out-competed methanogenesis for electron donors, such as H₂ and acetate. Methane production was observed only in samples incubated at 14–38&deg;C. At the beginning of methanogenesis, acetoclastic methanogenesis dominated. In accordance with the preferred substrate, most (91%) <i>mcrA</i> (encoding the methyl coenzyme-M reductase, a key gene in methanogenesis) clone sequences could be affiliated to the acetoclastic genus <i>Methanosarcina</i>. No methanogens were detected in the original soil. However, a diverse community of iron-reducing <i>Geobacteraceae</i> was found. Our results suggest that methane emission can remain transient and low if water-table fluctuations allow re-oxidation of ferrous iron, sustaining iron reduction as the most important process in terminal carbon mineralization.