The warming-induced thawing of permafrost promotes microbial activity, often resulting in enhanced greenhouse gas emissions. The ability of permafrost microorganisms to survive the in situ sub-zero temperatures, their energetic strategies and their metabolic versatility in using soil organic materials determine their growth and functionality upon thawing. Hence, functional characterization of the permafrost microbiome, particularly in the underexplored mid-latitudinal alpine regions, is a crucial first step in predicting its responses to the changing climate, and the consequences for soil-climate feedbacks. In this study, for the first time, the functional potential and metabolic capabilities of a temperate mountain permafrost microbiome from central Europe has been analysed using shotgun metagenomics. Permafrost and active layers from the summit of Muot da Barba Peider (MBP) [Swiss Alps, 2979 m above sea level (a.s.l.)] revealed a strikingly high functional diversity in the permafrost (north-facing soils at a depth of 160 cm). Permafrost metagenomes were enriched in stress-response genes (e.g. cold-shock genes, chaperones), as well as in genes involved in cell defence and competition (e.g. antiviral proteins, antibiotics, motility, nutrient-uptake ABC transporters), compared with active-layer metagenomes. Permafrost also showed a higher potential for the synthesis of carbohydrate-active enzymes, and an overrepresentation of genes involved in fermentation, carbon fixation, denitrification and nitrogen reduction reactions. Collectively, these findings demonstrate the potential capabilities of permafrost microorganisms to thrive in cold and oligotrophic conditions, and highlight their metabolic versatility in carbon and nitrogen cycling. Our study provides a first insight into the high functional gene diversity of the central European mountain permafrost microbiome. Our findings extend our understanding of the microbial ecology of permafrost and represent a baseline for future investigations comparing the functional profiles of permafrost microbial communities at different latitudes.