Permafrost thaw may increase the production of neurotoxic methylmercury (MeHg) in northern peatlands, but the downstream delivery of MeHg is uncertain. We quantified total mercury (THg) and MeHg concentrations in lakes and streams along a 1700 km permafrost transect in boreal western Canada to determine the influence of regional permafrost extent compared to local lake and catchment characteristics. In lakes, we assessed sediment microbial communities and modeled potential rates of water column photodemethylation (PD). Regardless of permafrost conditions, peatlands were the primary sources of MeHg across the transect as MeHg concentrations in streams increased with aromatic dissolved organic carbon (DOC), iron, and lower pH. Higher DOC and greater catchment peatland extent were further associated with higher stream %MeHg (MeHg/THg). Peatland lakes were potential MeHg sinks, with lower MeHg concentrations than streams (mean±1SD: 0.19±0.23 and 0.47±0.77 ng MeHg L cm-1, respectively), and larger stream catchments had lower %MeHg where PD may occur in abundant small lakes. Microbial communities in lake sediments showed that abundance of Hg reducing genes (merA) predominated over Hg methylating (hgcA) and MeHg demethylating (merB) genes. The effects of permafrost extent on MeHg processes in lakes were secondary to the influence of local catchment characteristics, but lakes in regions with less permafrost had higher DOC concentrations, higher %MeHg, and lower potential rates of PD. Our study highlights a need to understand the impacts of climate change on MeHg source and sink processes, particularly as mediated through changes to peatland DOC, to improve projections of future MeHg concentrations in northern catchments.