Oxidative conversion of lower alkanes over lithium-promoted magnesia catalysts offers a viable alternative for propene and ethene production. The catalytic performance of propane oxidative dehydrogenation and cracking shows yields up to 50% of olefin (propene and ethene). The reaction kinetics were studied by means of variation of the partial pressures of the reactants as well as by addition of product species to the reaction mixture. The observations can be qualitatively explained with a mechanism including activation of propane on the catalyst generating propyl radicals that undergo a radical-chain mechanism in the gas phase. Alkane activation is rate determining. Oxygen has two functions in the mechanism. First, the presence of small amounts of oxygen influences the radical gas-phase chemistry significantly because the type and concentration of chain propagator radicals are greatly increased. At higher oxygen partial pressures the radical chemistry is only slightly influenced by the increasing oxygen concentration. The second function of oxygen is to facilitate the removal of hydrogen from the surface OH- species that are formed during the activation of propane on the catalyst. Carbon dioxide has a strong inhibiting effect on the reaction without changing the product distribution, due to strong adsorption on the site that activates propane. (C) 2003 Elsevier Inc. All rights reserved.