Emissions of methane, a potent greenhouse gas, from marine sediments are controlled by anaerobic oxidation of methane coupled primarily to sulphate reduction (AOM). Sulphate-coupled AOM is believed to be mediated by a consortium of methanotrophic archaea (ANME) and sulphate-reducing Deltaproteobacteria but the underlying mechanism has not yet been resolved. Here we show that zero-valent sulphur compounds (S(0)) are formed during AOM through a new pathway for dissimilatory sulphate reduction performed by the methanotrophic archaea. Hence, AOM might not be an obligate syntrophic process but may be carried out by the ANME alone. Furthermore, we show that the produced S(0)--in the form of disulphide--is disproportionated by the Deltaproteobacteria associated with the ANME. Our observations expand the diversity of known microbially mediated sulphur transformations and have significant implications for our understanding of the biogeochemical carbon and sulphur cycles.