Methanogenesis and methane oxidation are the major biological processes affecting the global cycling of the powerful greenhouse gas methane. To carry out the two alternative bioconversions, Nature has cleverly recycled key reactions for the C1 transfers between the oxidation levels of formaldehyde and formate, and these involve analogous enzyme systems and common specialized cofactors, methanopterin and methanofuran. Until recently, the distribution of these functions has been limited to methanogenic archaea and methylotrophic proteobacteria, and their evolutionary history remained obscure. Single interdomain lateral transfer of the respective genes has been suggested to play a role. Here we show that genes for C1 transfer reactions linked to methanopterin and methanofuran are also present in diverse representatives of the enigmatic bacterial clade, the Planctomycetes. Phylogenetic analysis places the planctomycete sequences as distantly from their archaeal counterparts as from their proteobacterial counterparts, suggesting novel scenarios for the evolution of the C1 transfer functions in both methanogens and methylotrophs. This finding suggests a possible role for Planctomycetes in the evolution of the methane cycle on Earth.