Mercury (Hg) contamination of aquatic food webs is controlled in part by the formation and accumulation of toxic and bioaccumulative methylmercury (MeHg). MeHg production is mediated by metabolically diverse microorganisms carrying the hgcAB gene pair, while the demethylation reaction is mediated by several biotic and abiotic processes. However, the relative importance of these two processes on MeHg accumulation and the environmental factors that influence them are poorly characterized, especially in eutrophic environments. In this study, both Hg methylation and MeHg demethylation in a eutrophic freshwater lake were linked to ambient MeHg concentrations and hgcA abundance and expression. High methylation rate potentials indicated in situ MeHg formation was a key source of MeHg to the water column, driven by high hgcA abundance and transcription. Molybdate treatment decreased methylation rate potentials, highlighting the importance of sulfate reduction in driving MeHg formation. Sulfate-reducing bacteria accounted for over 50% of the hgcA gene transcription, despite representing less than 10% of the hgcA-carrying microbial community. An arsR-like transcriptional regulator preceded many hgcA sequences; these were transcriptionally active and linked to lower hgcA expression. Overall, this study elucidates the microbial and biogeochemical processes that influence the in situ formation of MeHg in understudied eutrophic freshwater environments.