Oxidation by soil bacteria is the only biological sink for atmospheric methane (CH4). There are substantial uncertainties regarding the global size of this sink, in part because the ecological controls of the involved processes are not well understood to date. We have investigated effects of severe summer drought and of nitrogen inputs (ammonium nitrate or cattle urine) on soil CH4 fluxes in a field experiment. Soil moisture was the most important factor regulating the temporal dynamics of CH4 fluxes. Simulated drought episodes altered the soil’s water balance throughout the year, increasing CH4 oxidation by 50% on an annual basis. N fertilizers exerted only small and transient effects at the ecosystem level. Laboratory incubations suggested that effects differed between soil layers, with larger effects of drought and N application in the top soil than in deeper layers. With soil moisture being the primary controlling factor of methanotrophy, a detailed understanding of the ecosystem’s water balance is required to predict CH4 budgets under future climatic conditions.