Silica-supported transition metal (Ni, Fe, Co) catalysts modified with rare-earth elements (Pr, Nd, Sm, Dy, Ho, Er, Tm, Yb) were synthesized. Oxygen chemisorption, high temperature oxidation and static magnetic measurements were applied to characterize the physical states of the catalysts. The catalytic activities of these systems were studied in the hydrogenation of carbon mono- and dioxide, the oxidation of CO and in the synthesis of ammonia from H-2 and N-2. A physical model describing the promotion activity of rare earth elements on transition metals via the dipole magnetic interaction and the resulting increase in the probability of a catalytic act is suggested. An increased rate of dissipation of the hydrogenolysis reaction energy is suggested to explain the increased selectivity in the hydrocarbon dehydrogenation process.