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Methylotrophic bacteria (non-methanotrophic methanol oxidizers) consuming reduced carbon compounds containing no carbon–carbon bonds as their sole carbon and energy source have been found in a great variety of environments. Here, we report a unique moderately thermophilic methanol-oxidising bacterium (strain LS7-MT) that grows optimally at 55 °C (with a growth range spanning 30 to 60 °C). The pure isolate was recovered from a methane-utilizing mixed culture enrichment from an alkaline thermal spring in the Ethiopia Rift Valley, and utilized methanol, methylamine, glucose and a variety of multi-carbon compounds. Phylogenetic analysis of the 16S rRNA gene sequences demonstrated that strain LS7-MT represented a new facultatively methylotrophic bacterium within the order <i>Hyphomicrobiales</i> of the class <i>Alphaproteobacteria</i>. This new strain showed 94 to 96% 16S rRNA gene identity to the two methylotroph genera, <i>Methyloceanibacter</i> and <i>Methyloligella.</i> Analysis of the draft genome of strain LS7-MT revealed genes for methanol dehydrogenase, essential for methanol oxidation. Functional and comparative genomics of this new isolate revealed genomic and physiological divergence from extant methylotrophs. Strain LS7-MT contained a complete <i>mxaF</i> gene cluster and <i>xoxF1</i> encoding the lanthanide-dependent methanol dehydrogenase (XoxF). This is the first report of methanol oxidation at 55 °C by a moderately thermophilic bacterium within the class <i>Alphaproteobacteria</i>. These findings expand our knowledge of methylotrophy by the phylum <i>Proteobacteria</i> in thermal ecosystems and their contribution to global carbon and nitrogen cycles.