Direct synthesis of phenol by hydroxylation of benzene with oxygen and hydrogen was investigated on precious metals supported on silica. On Pd, Rh, Ir and Pt, phenol was formed with a large amount of water, Modification of the catalyst was studied with various metal oxides. When the catalyst was modified with vanadium oxide, the phenol formation activity was significantly improved. The best vanadium oxide loading was 1 wt.-%, and laser Raman spectra suggested that vanadium oxide existed as a monomeric species. Oxygen activated on the vanadium species transferred to a Pt site, and as a result the phenol formation activity was promoted. Improved dispersion of precious metals by modification with vanadium oxide seemed to be related to the increase in the rate of phenol formation. Hydroxylation with oxygen and hydrogen was applicable to other aromatic compounds as well.