Abstract Abrupt permafrost thaw events are projected to contribute up to 40% of permafrost carbon (C) release to the atmosphere. They involve sudden hydrological shifts within the soil column; however, the exact microbial functional pathway shifts induced by these events remain cryptic. To investigate how C and nutrient cycling processes differ in thaw scenarios, we conducted metagenomic analyses in a pilot study on soil and water subsamples (two replicates per depth group, and treatment) after experimental thaw of intact soil columns (1 m tall mesocosms) and soil horizons in isolation (120 mL vial incubations). The microbial community structure response was masked by high depth dependency, with large shifts in functional pathways within the permafrost soil horizon under the “abrupt” treatment. Most pathways of C cycling remained similar under both “abrupt” and “gradual” thaw, while denitrification and sulfate functional pathways were stimulated within the “abrupt” treatment. This is likely caused by thaw water providing more energetically favorable terminal electron acceptors for metabolic pathways such as denitrification, thus inhibiting the terminal stages of C degradation that result in methane production. This is supported by the 90% decrease in production under “abrupt” thaw simulation. This pilot study of “abrupt” and “gradual” thaw simulations highlights the potential for abrupt thaw to enhance carbon‐nitrogen interactions by modifying redox conditions. Abrupt thaw events are expected to increase in warming permafrost regions, and results from our study offer a novel perspective on the close interactions that lowland permafrost soils have when cycling C and nutrients. Plain Language Summary Palsas—a form of permafrost peatland that are small in size but rich in soil C—can either transition slowly into wetlands (gradual) or collapse (abrupt) in thermokarst ponds fast. The microbial response to the hydrological changes due to those two timelines is yet not fully understood. We simulated abrupt and gradual thaw scenarios in a laboratory incubation and took subsamples from the incubated soil (before and after the experiment). We found that the microbial community responded to thaw primarily in the permafrost soil horizon. From a previous experiment, we knew that carbon dioxide emission increased in abrupt thaw and that methane emission was negligible in “abrupt” in “gradual” thaw. By comparing the functional potential of the microbes, we were able to see “who” may be behind the previously observed carbon dioxide and methane patterns. These insights offer greater understanding, and promising future directions of inquiry into better predicting how permafrost will contribute to the greenhouse warming effect and global C cycle in our post‐thaw future. Key Points Significant shifts in microbial community structure under abrupt thaw simulation in the Permafrost Layer only Functional pathways involved in C cycle were unchanged under “gradual” and “abrupt” thaw simulations, with the exception of methanogenesis Interactions with N cycle limited terminal steps of C cycle leading to methane production inhibition