Oxidation of methane with oxygen in the presence of hydrogen has been performed at atmospheric pressure over a large variety of catalysts. Among the catalysts tested, iron phosphate showed a very unique catalytic property. The presence of hydrogen initiates the selective oxidation of methane to methanol at greater than or equal to 623 K over FePO4 catalyst. Formaldehyde as a secondary product is produced through methanol at higher reaction temperatures, while, in the absence of hydrogen, no reaction occurs at less than or equal to 673 K on the same FePO4 catalyst. The conversion of methane is notably low at >673 K in the absence of hydrogen and only formaldehyde and carbon oxides are formed. The comparison of the kinetic results in the presence and absence of hydrogen has suggested the generation of an active oxygen species on the catalyst surface in the presence of hydrogen. The pulse reaction studies show that methanol is formed only when methane, hydrogen, and oxygen are cofed. The formation of methanol is enhanced by pretreatment of the catalyst surface with hydrogen. The lattice oxygen of the surface is suggested to be responsible for the oxidation of methane to formaldehyde in the absence of hydrogen at relatively high temperatures (>673 K), while gaseous oxygen is indispensable for the selective oxidation of methane to methanol in the presence of hydrogen. The comparison of the results for the methane oxidation using H2O2 and H-2-O-2 gas mixture suggests that the active species generated from H-2-O-2 gas mixture is the same as that from H2O2. X-ray photoelectron spectroscopy studies have indicated that Fe(II) exists on the surface after treatment in a stream of CH4-O-2-H-2 suggesting the interconversion of Fe(III) reversible arrow Fe(II) during the reaction. The reductive activation of dioxygen by hydrogen on an iron site must generate the active and selective oxygen species for the conversion of methane to methanol.