Vapor-phase alkylation of phenol with methanol was investigated over CeO2-MgO catalysts prepared utilizing a molten mixture of the corresponding nitrates and citric acid. The CeO2-MgO had attractive catalytic performance without decay of activities at the temperature range between 450 and 550 degrees C, and it had excellent selectivities to the sum of o-cresol and 2,6-xylenol higher than 98%. The CeO2-MgO catalysts were found to be mixtures of MgO and an interstitial solid solution of MgxCe1-x/2O2 asa result of XRD measurement. It is confirmed that citric acid used in the preparation heightens the dispersion of the solid solution in the MgO matrix. The pure CeO2, which also exhibited efficient ortho-selectivity, had only weak basic sites in the TPD experiment of adsorbed CO2, while the pure MgO with strong basicity showed very low reaction rate in the methylation. The solid solution of MgCe1-x/2O2 in the CeO2MgO catalyst probably provides active centers for the methylation of phenol. In the results of methanol decomposition, methanol was converted into CO, CO2, and CH4 over the CeO2-MgO catalysts, without producing dimethyl ether. The reaction mechanism of the ortho-methylation over the CeO2-MgO catalyst is speculated : the ortho position of phenol adsorbed perpendicularly on weak basic sites on the MgxCe1-x/2O2 solid solution is selectively alkylated by methanol which is possibly activated in the form of formyl or hydroxy methyl group rather than methyl cation.