At modern cold seeps, the anaerobic oxidation of methane (AOM) is the dominant pathway for methane consumption in marine sediments. AOM, which is mediated by a consortium of methane oxidizing archaea and sulfate reducing bacteria, is proposed to be responsible for authigenic carbonate formation. A methane-derived carbonate chimney was collected from the Shenhu area, northern South China Sea. The membrane lipids and their very low carbon isotopic compositions (115‰ to 104‰) in the Shenhu chimney suggest the presence of an AOM process. Three specific archaeal and bacterial biomarkers were detected, including Ar, DAGE 1f, and monocyclic MDGD. Their strongly depleted 13 C values (115‰ to 104‰), which are lower than those of the normal marine lipids in sediments, reveal biogenic methane as their origin. The carbonate deposits exhibiting a chimney structure indicate that a vigorous methane-rich fluid expulsion may have occurred at the seafloor. We propose that the decomposition of gas hydrates at depth is the likely cause of seepage and cold seep carbonate formation in the Shenhu area.