Microbial decomposition of soil organic carbon (SOC) in the thawing Arctic permafrost is one of the most important, but poorly understood, processes in determining the greenhouse gases feedback of tundra ecosystems to climate. Here, we examine changes in microbial community structure during an anoxic incubation at either –2 or 8 °C for up to 122 days using both an organic and a mineral soil collected from the Barrow Environmental Observatory in northern Alaska, USA. Soils were characterized for SOC chemistry, and GeoChips were used to determine microbial community structure and functional genes associated with C degradation and Fe(III) reduction. We observed notable decreases in functional gene diversity (at P < 0.05) in response to warming at 8 °C, particularly in the organic soil. A number of genes associated with SOC degradation, fermentation, methanogenesis, and iron cycling decreased significantly (P < 0.05) after 122 days of incubation, which coincided well with decreasing labile SOC content, soil respiration, methane production, and iron reduction. The soil type (i.e., organic vs. mineral) and the availability of labile SOC were among the most significant environmental factors impacting the functional community structure. In contrast, the functional structure was largely unchanged in the –2 °C incubation due to low microbial activity resulting in less competition or exclusion. These results demonstrate the vulnerability of SOC in Arctic tundra to warming, facilitated by iron reduction and methanogenesis, and the importance of microbial communities in moderating such vulnerability.