Microbial coal-bed methane is an important economic resource and source of a potent greenhouse gas, but controls on its formation are poorly understood. To test whether the microbial degradability of coal limits microbial methane, we monitored methoxyl group demethylation—a reaction that feeds methanogenesis—in a global sample suite ranging in maturity from wood to bituminous coal. Carbon isotopic compositions of residual methoxyl groups were inconsistent with a thermal reaction, instead implying a substrate-limited biologic process. This suggests that deep biosphere communities participated in transforming plant matter to coal on geologic time scales and that methoxyl abundance influences coal-bed methane yield. Carbon isotopic enrichments resulting from microbial methylotrophy also explain an enigmatic offset in the carbon-13 content of microbial methane from coals and conventional hydrocarbon deposits.