A new catalyst comprising cerium and silver ion-exchanged ZSM-5 zeolite is reported in this paper, for the reduction of nitric oxide by methane in the presence of excess oxygen. The bi-cation exchanged Ce-Ag-ZSM-5 catalyst was very active for this reaction, while either Ce-ZSM-5 or Ag-ZSM-5 alone showed low activity. The presence of oxygen in the feed gas mixture enhanced the activity of the catalyst and the NO conversion to N-2 increased with the CH4/NO ratio and Ag loading of the zeolite. The presence of water vapor had a small adverse effect on the catalyst activity. The coexistence of Ce and Ag ions in the zeolite is crucial for achieving high NO conversion to N-2 A small amount of cerium is adequate to promote the selective catalytic reduction of NO. The two main functions of Ce ions are (i) to provide the Ag ion sites with NO2 by catalyzing the oxidation of NO to NO2 and (ii) to suppress the direct CH4 oxidation to CO2. The Ag sites are the active centers where the reaction of NO2 with CH4 takes place.