Groundwater for drinking water production may contain dissolved methane (CH4) at variable concentrations. Most of this important greenhouse gas is often vented to the atmosphere during primary aeration and gas stripping processes at drinking water treatment plants (DWTPs). However, limited information exists regarding emission and fate of methane at many groundwater-fed DWTPs. This study estimates emission of methane from 1,004 DWTPs in Denmark and includes data from 3,068 groundwater wells. The fate of methane and occurrence of methane oxidizing bacteria in DWTPs was examined, including the potential role in ammonia removal. Methane emission from Danish DWTPs was estimated to be 1.38–2.95 × 10−4 Tg CH4/y which corresponds to 0.05–0.11% of the national anthropogenic methane emission. Trace levels of methane remained in the drinking water after primary aeration and entered the sand filters as a potential microbial substrate. Methanotrophic bacteria and active methane oxidation was always detected in the sand filters at groundwater-fed DWTPs. Methanotrophic consortia isolated from DWTP sandfilters were inoculated into lab-scale sand filters and the activity confirmed that methanotrophic consortia can play a role in the removal of ammonia via assimilation and co-oxidation. This suggests a potential for facilitating the removal of inorganic constituents from drinking water using methane as a co-substrate.