The thermal stability and isobutane oxidation activity of catalysts with Fe selectively placed in the Keggin anion have been studied. For the Cs3H1PMo11FeO39 salt, Fe was released from the Keggin structure above 570K, as observed by FT-IR spectroscopy. However, in the presence of NH4+ as counter-cation, Fe was released from the Keggin anion at 470 K, simultaneously catalysing the elimination of NH4+. Fe-substituted catalysts with Fe contents of 0-1, where ammonium was removed during the heat pre-treatment, showed a negative influence of Fe on the selectivity to methacrylic acid (MAA) and on the isobutane conversion. The influence of the initial position of Fe, inside or outside the Keggin anion, was studied. A catalyst in which Fe was initially as counter-cation, Cs1.5Fe0.5(NH4)(2.0)PMo12O40, presented a 21% selectivity to MAA at 633 K after 20 h in operation, against a 15% selectivity of a catalyst that had a similar composition but with Fe initially inside the Keggin anion, Cs-1.5(NH4)(2.0)PMo11.5Fe0.5O39.5. Both catalysts showed similar isobutane conversions of ca. 8%. The catalysts underwent changes during the first few hours in a reaction that led to an increase of the selectivity to MAA in both the cases. However, the active sites derived from the lacunary species generated after release of Fe from the Keggin anion were less selective than those derived from 12-molybdophosphoric units.