A budget for the methane (CH4) cycle in the Xilin River basin of Inner Mongolia is presented. The annual CH4 budget in this region depends primarily on the sum of atmospheric CH4 uptake by upland soils, emission from small wetlands, and emission from grazing ruminants (sheep, goats, and cattle). Flux rates for these processes were averaged over multiple years with differing summer rainfall. Although uplands constitute the vast majority of land area, they consume much less CH4 per unit area than is emitted by wetlands and ruminants. Atmospheric CH4 uptake by upland soils was −3.3 and −4.8 kg CH4 ha−1 y−1 in grazed and ungrazed areas, respectively. Average CH4 emission was 791.0 kg CH4 ha−1 y−1 from wetlands and 8.6 kg CH4 ha−1 y−1 from ruminants. The basin area-weighted average of all three processes was 6.8 kg CH4 ha−1 y−1, indicating that ruminant production has converted this basin to a net source of atmospheric CH4. The total CH4 emission from the Xilin River basin was 7.29 Gg CH4 y−1. The current grazing intensity is about eightfold higher than that which would result in a net zero CH4 flux. Since grazing intensity has increased throughout western China, it is likely that ruminant production has converted China's grazed temperate grasslands to a net source of atmospheric CH4 overall.