This study explores the carbon stability in the Arctic permafrost following the sea level transgression since the Last Glacial Maximum (LGM). Arctic permafrost is a significant natural reservoir of greenhouse gas which is stored in frozen organic carbon, methane hydrates and natural gas reservoirs. Post-LGM sea level transgression resulted in ocean water, which is up to 20 oC warmer compared to the average annual air mass, inundating, and thawing the permafrost. This study develops a one-dimensional multiphase flow, multicomponent transport numerical model and apply it to investigate the coupled thermal, hydrological, microbial, and chemical processes occurring in the thawing permafrost. Results show that microbial methane is produced and vented to the seawater immediately upon the flooding of the Arctic continental shelves. This microbial methane is generated by biodegradation of the previously frozen organic carbon in the thawing permafrost. The maximum seabed methane flux is predicted in the shallow water where the sediment has been warmed up, but the remaining amount of organic carbon is still high. It is less likely to induce seabed methane emission from methane hydrate dissociation. Such situation only happens when there is very shallow (~200 m depth), intra-permafrost methane hydrate, the occurrence of which is limited. This study provides insights into the limits of methane release from the ongoing flooding of the Arctic permafrost, which is critical to understand the role of the Arctic permafrost in the carbon cycle, ocean chemistry and climate change.