As a crucial part of the global carbon cycle, microbially mediated anaerobic oxidation of methane (AOM) moderates the input of methane to the atmosphere and helps regulate Earth’s climate by consuming methane produced in various marine, terrestrial, and subsurface environments. It remains one of the most tantalizing and controversial scientific issues in both microbial ecology and environmental science since more than three decades when this process has been recognized. Recently, numerous researches have been carried out to investigate the reaction especially in the marine sediments associated with methane seeps. Unfortunately, there is still a gap to fully understand this reaction mechanism. In this paper, the recent progress in modern seafloor AOM including reaction mechanism, substrate, kinetics and energy yield, electron accepters and the involved methanotrophic archaea (ANME) and other microbes are reviewed. Furthermore, the role of AOM in environmental effects and climate changes in the past, present and future is illustrated and highlighted and the future challenges are given in the last part of this paper. We hope that this review will shed new light on an improved understanding of the AOM process in marine sediments.