Branched glycerol dialkyl glycerol tetraethers (branched GDGTs) are bacterial membrane lipids widely used as biomarkers for terrestrial and marine paleoenvironmental reconstruction. Sparsely branched and overly branched GDGTs (sb- and ob-GDGTs) are predominantly detected in anaerobic environments and have been proposed as redox proxies in marine settings. However, their distributions, environmental controls, and biological sources in terrestrial environments remain poorly understood. Here, we investigated the distributions of sb/br/ob-GDGTs, together with bacterial community composition in two permafrost peatland soil profiles from the Tibetan Plateau. Our results demonstrate that elevated soil water content (SWC) influences branched GDGT composition by creating anaerobic conditions that promote the production and methylation of sb/br/ob-GDGTs. Co-occurrence network analyses revealed strong positive correlations between the relative abundances of sb/br/ob-GDGTs and anaerobic bacterial communities, including taxa affiliated with <em>Proteobacteria</em>, <em>Caldithrix</em>, <em>Nitrospirae</em>, <em>Spirochaetes</em> and <em>Chloroflexi</em>. These findings suggest that oxygen-limited conditions may reshape sb/br/ob-GDGT-producing bacterial communities in permafrost soils, thereby promoting the accumulation of sb/br/ob-GDGTs. Furthermore, we demonstrate that the methylation index of ob- and br-GDGTs (MI_ob/br) serves as a sensitive indicator for soil redox dynamics and may be applied to reconstruct paleohydrological variability, thereby aiding assessments of permafrost carbon-cycle feedbacks to climate warming.