In the Jurassic period, the Early Toarcian oceanic anoxic event (about 183 million years ago) is associated with exceptionally high rates of organic-carbon burial, high palaeotemperatures and significant mass extinction. Heavy carbon-isotope compositions in rocks and fossils of this age have been linked to the global burial of organic carbon, which is isotopically light. In contrast, examples of light carbon-isotope values from marine organic matter of Early Toarcian age have been explained principally in terms of localized upwelling of bottom water enriched in 12C versus 13C (refs 1,2,5,6). Here, however, we report carbon-isotope analyses of fossil wood which demonstrate that isotopically light carbon dominated all the upper oceanic, biospheric and atmospheric carbon reservoirs, and that this occurred despite the enhanced burial of organic carbon. We propose that--as has been suggested for the Late Palaeocene thermal maximum, some 55 million years ago--the observed patterns were produced by voluminous and extremely rapid release of methane from gas hydrate contained in marine continental-margin sediments.