Metagenome assembled genomes (MAGs) and single amplified genomes (SAGs) affiliated with two distinct Methanobacterium lineages were recovered from subsurface fracture waters of the Samail Ophiolite, Sultanate of Oman. Lineage Type I was abundant in waters with circumneutral pH, whereas lineage Type II was abundant in hydrogen rich, hyperalkaline waters. Type I encoded proteins to couple hydrogen oxidation to CO2 reduction, typical of hydrogenotrophic methanogens. Surprisingly, Type II, which branched from the Type I lineage, lacked homologs of two key oxidative [NiFe]-hydrogenases. These functions were presumably replaced by formate dehydrogenases that oxidize formate to yield reductant and cytoplasmic CO2 via a pathway that was unique among characterized Methanobacteria, allowing cells to overcome CO2/oxidant limitation in high pH waters. This prediction was supported by microcosm-based radiotracer experiments that showed significant biological methane generation from formate, but not bicarbonate, in waters where the Type II lineage was detected in highest relative abundance. Phylogenetic analyses and variability in gene content suggested that recent and ongoing diversification of the Type II lineage was enabled by gene transfer, loss, and transposition. These data indicate that selection imposed by CO2/oxidant availability drove recent methanogen diversification into hyperalkaline waters that are heavily impacted by serpentinization.