Significance Permafrost degradation may induce soil carbon (C) loss, critical for global C cycling, and be mediated by microbes. Despite larger C stored within the active layer of permafrost regions, which are more affected by warming, and the critical roles of Qinghai–Tibet Plateau in global C cycling, most previous studies focused on the permafrost layer and in high-latitude areas. Here, we demonstrate in situ that permafrost degradation alters the diversity and potentially decreases the stability of active layer microbial communities. Additionally, these changes are associated with soil C loss and potentially a positive C feedback. This study provides insights into microbial-mediated mechanisms responsible for C loss within the active layer in degraded permafrost, aiding in the modeling of C emission under future scenarios.