Methanol reaction on oxygen-covered Co thin films deposited on Mo(110) exhibits selectivity different from reaction on the purl Co overlayers. The presence of oxygen favors partial oxidation to formaldehyde over decomposition to CO and H-2 Other products evolved from methanol reaction on the Go-oxygen overlayer are CO, methyl radicals, H2O, H-2, and methanol. In addition to inhibition of C-PI bond breaking, oxidation also decreases the activity of the Co surface toward C-O and O-H bond scission, leading to a reduction in total reactivity. Furthermore, electron energy loss data show that the methoxide intermediate is stable up to high temperatures (similar to 450 K). The dependence of product yields on oxygen and Co coverages indicates that formaldehyde production occurs on oxygen-covered Co and does not result from oxygen-induced restructuring of the Co overlayer. These studies of oxygen-covered Co thin films on Mo(110) demonstrate that the activity of a bimetallic surface can be altered by the extent of oxidiation in a manner similar to oxidation of bulk transition metals.