The public and environmental health consequences of mercury (Hg) methylation have drawn much attention and considerable research to Hg methylation processes and their dynamics in diverse environments and under a multitude of conditions. However, the net methylmercury (MeHg) concentration that accumulates in the environment is equally determined by the rate of MeHg degradation, a complex process mediated by a variety of biotic and abiotic mechanisms, about which our knowledge is limited. Here we review the current knowledge on MeHg degradation and its potential pathways and mechanisms. We describe detoxification by resistant microorganisms that employ the Hg resistance (mer) system to reductively break the carbon–mercury (C–Hg) bond producing methane (CH4) and inorganic mercuric Hg(II), which is then reduced by the mercuric reductase to elemental Hg(0). Very recent research has begun to elucidate a mechanism for the long-recognized mer-independent oxidative demethylation, likely involving some strains of anaerobic bacteria as well as aerobic methane-oxidizing bacteria, i.e., methanotrophs. In addition, photochemical and chemical demethylation processes are described, including the roles of dissolved organic matter (DOM) and free radicals as well as dark abiotic demethylation in the natural environment about which little is currently known. We focus on mechanisms and processes of demethylation and highlight the uncertainties and known effects of environmental factors leading to MeHg degradation. Finally, we suggest future research directions to further elucidate the chemical and biochemical mechanisms of biotic and abiotic demethylation and their significance in controlling net MeHg production in natural ecosystems.