The microflora responsible for methane oxidation are stratified in a narrow band in the thermocline of Lake Mendota where dissolved oxygen is low during summer. Oxygen sensitivity of growth of these organisms or of methane oxidation cannot account for their absence from the epilimnion because oxygen does not inhibit either process under in situ conditions at concentrations exceeding those measured in natural samples. The dissolved inorganic nitrogen content of samples where methane oxidation rates were highest was >1 mg·liter−1 in summer 1977. We could not obtain evidence of in situ nitrogen fixation although enrichment cultures grew on nitrogen‐free media and fixed 15N2. Nitrite was present at the position in the water column of maximum methane oxidation; this suggests that methanotrophic bacteria co‐oxidized ammonia. The distribution of methanotrophs in the lake indicated that their position in the water column at each time of year was determined by the concentration profiles of oxygen and methane. Methane oxidation in summer depletes the methane in the epilimnion and the absence of oxygen in the hypolimnion precludes growth of the organisms there. At other times of year the rates of oxidation of methane seem to be determined by the concentration of methane in the water. The rate of oxidation of methane by a sample was increased by additional methane when the in situ concentration was <5 µM.